economy
Thanks to new rules in places like the UK and EU, you can now let a budgeting app securely peek at your bank balance without ever handing over your banking password.
Open banking describes the practice of letting customers grant third-party apps secure access to their financial data through regulated interfaces, so a budgeting app can peek at your bank balance and transactions with your consent, without ever seeing or storing your actual banking password.
Free banking isn't a real regulatory term describing this practice, it's simply an unrelated-sounding phrase. Shadow banking refers to lending and financial activity that happens outside traditional regulated banks, an entirely different and often riskier concept unrelated to data-sharing consent.
Open banking was pioneered largely through Europe's PSD2 regulations, which effectively ended banks' exclusive hold on customer financial data, opening the door to a wave of new budgeting apps, instant loan-eligibility checks, and account-to-account payment services built on top of that shared data.
economy
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