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Open banking technology: impact and challenges associated with it

Antonis Kazoulis
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Last editedMay 20233 min read

Open banking is as much of a regulation as it is a new breed of technology. Its evolution has created new software, new tools and solutions, and a significant developer ecosystem.

Developers now have a goldmine in their hands, as they no longer have to hunt for information or build complex models from scratch. Their access to information is structured, easy, and systematic.

They do, however, face a lot of challenges as well. In this article, we’ll take a look at how open banking technology has impacted developers, and different industries, as well as the challenges that come with it.

Why developers should embrace open banking technology

Every time a developer starts writing a line of code, the voice of their manager echoes in the background, “customer experience comes first”. While that is absolutely true, in the case of open banking technology, developers are the ones who are being served — a welcome change.

If a developer has the choice between two APIs that do the same thing, they will surely opt for the one that’s sharper and more efficient. Financial institutions who make their APIs available according to the guidelines of PSD2, are therefore motivated to make your life as a developer easier, to drive the adoption of their APIs.

How OB technology is disrupting industries and consumer behaviour

Data categorisation

Data categorisation is the process of segregating raw data into different groups to give consumers actionable insights. These categories could be personal spending, utilities, entertainment, or travel. By doing so, you’re helping users understand how they spend their money and paving the way for optimizing their spending.

Here is an example. If a user can clearly see that issuing single train tickets on a daily basis costs them €100, they could issue a monthly ticket, saving them a large portion of the money. This is a certain kind of visibility they didn’t have previously.

Data categorisation is a major chapter in the evolution of open banking applications. The idea expands on many financial application scenarios such as lending, budgeting, and investing. By supplying users with clear insights into their behaviour, you’re giving them the opportunity to seize control of their financial well-being.

This technology is breaking down the barrier between banks and consumers, lessening the dependency between the two. Consumers will no longer have to get their financial advice from bankers nor do they need to have a master’s in Accounting & Finance to invest, request a loan, or save money. They will have all the information they need to make informed decisions by themselves.

Specialised, out-of-the-box tools

What makes open banking technology so appealing and promising is the diversity that comes with it. Even though technology is innately tied to financial services, it’s not limited to it. Open banking software can be a game-changer for several industries:

  • Travel

  • Loan

  • iGaming

  • eCommerce

API technology can be the foundation for industry-altering solutions and tools that serve specific industries. Here are some examples to contextualize this idea:


Travelling is not what it used to be. We book vacations from the comfort of our own phones and navigate cities we’ve never been to as if we are locals. The experience is easily accessible to anyone.

This experience could be enhanced even more with some open banking magic. Logging on to a website to book flights or accommodation would immediately communicate with your personal finance app and give you the most affordable options for your trip.

The financial side of your trip could be automatically generated with details like exchange rates, discounts, and offers being accounted for without your involvement.


This is one of the most commonly referenced use cases when it comes to out-of-the-box open banking tools. The power of open banking data can create real-time, accurate risk profiles for consumers, fast-tracking the loan application process.

Long phone calls, endless paperwork, and weeks on end of waiting time would be things of the past. A tool specifically designed for the loan industry could aggregate all necessary information for an applicant and grant or reject their loan application based on the risk tendency.


One of the main reasons the open banking regulation was put together was to elevate the security of online payments. The Strong Customer Authentication initiative is the cornerstone of this effort, and can boost the eCommerce industry to new heights:

  • It reduces card fraud since you don’t need a card to complete a payment

  • Open banking technology gives online businesses ownership of refunds as they control the refund process from start to finish

  • It reduces cart abandonment as consumers can use facial recognition, fingerprint or another secure login method to approve transactions. This reduces the number of steps involved in the payment process

3 important open banking software challenges

Whether internally developed or open-source, software solutions for open banking are always aimed at solving particular problems. These initiatives don’t come without their own set of challenges:

Fast-paced production

People have options, and they want what they can get as fast as possible. The word “competition” downplays the pressure on developers and companies to produce software solutions as fast and as well as possible. Gone are the days of monopolies.

Open banking software solutions have opened the floodgates, and people will not hesitate to change providers if they feel they are left behind in terms of innovation.

The pursuit of the ideal customer service

A by-product of having choices is that people will no longer have to put up with subpar customer service. People seek a software provider that can guide them, help them, and assist them in any kind of roadblock or trouble they may encounter.

People don’t buy the product, they buy the brand and the support that comes with it.

Keep security as airtight as possible

Online payment security is a living organism, and software needs to be able to keep up with changes in regulation and market forces. Hackers and fraudsters always catch up to new tech, which means that open banking software needs to be agile enough to react to it.

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