TECHNOLOGY

What 'Open' Really Means in Banking: Data Portability and Choice

What 'Open' Really Means in Banking: Data Portability and Choice

Introduction: The Buzzword That Demands a Definition

In the world of banking, 'open' has become one of the most overused yet least understood terms. For some, it means exposing APIs to third-party developers. For others, it signals a willingness to share account information. But ask a customer what 'open' truly means, and the answer is strikingly simple: the freedom to leave without losing their data, their history, or their preferred financial applications. This article explores how a small but influential group of financial institutions is redefining 'open' by building genuine portability into the very fabric of their technology—and why partnering with open-source consortia has become the cornerstone of this strategy.

The Philosophy of Exit

Enabling customers to leave might sound counterintuitive for a bank. But industry insiders argue that the opposite is true. When a bank makes it effortless for a customer to take their data and applications elsewhere, it forces the institution to compete on service, user experience, and trust rather than inertia. According to a senior technology executive at a European challenger bank, the shift in mindset began with a simple realization: “Enabling them to leave meant enabling them to take their applications and their data with them. This meant using open interfaces throughout, not building SDKs the customers had to integrate, and also using open data models everywhere.”

This philosophy stands in stark contrast to the traditional banking approach, where proprietary interfaces and closed data formats lock customers into a single ecosystem. A 2023 report from Accenture estimated that nearly 65% of traditional banks still rely on custom, closed APIs that make data portability technically challenging and costly. The same report found that banks adopting open, standardised interfaces saw a 40% increase in customer retention after the first year—suggesting that the freedom to leave actually encourages loyalty.

The Role of Open Data Models

Central to this new openness are open data models—standardised ways of representing financial data such as accounts, transactions, and beneficiaries. Instead of each bank building its own proprietary schema, a growing number of institutions are adopting models defined by industry consortia such as the Open Banking Standard in the UK, the Financial Data Exchange (FDX) in North America, and the Berlin Group in Europe. These models ensure that if a customer moves to another provider, their transaction history, recurring payments, and even budget categories can be transferred without manual re-creation.

One notable example comes from a Nordic fintech that built its entire product stack on the Open Banking Standard’s reference implementation. The company’s CTO explained, “The obvious choice in who to work with was in fact the very organizations responsible for the open data models and interfaces we wanted to build into our products. As it turned out, these organizations really needed help when it came to their open-source reference implementations anyway and welcomed us with open arms.”

Partnerships That Go Beyond Compliance

The decision to work directly with the consortia—rather than simply complying with their standards independently—proved transformative. By contributing code back to the reference implementations, the fintech ensured that the open-source tools were production-ready and widely tested. In return, the consortia gained a high-quality reference implementation that other members could adopt. “We said we will contribute as much as possible to these organizations and in turn build the open-source reference implementations we contributed back into our products and therefore endorse the quality,” the executive added. This symbiotic relationship has led to long-lasting partnerships that continue to deepen—many of which began as a simple shared commitment to openness.

Industry Context: From Lock-In to Liberation

The broader financial industry is waking up to the costs of vendor lock-in. A survey by McKinsey in 2024 revealed that 58% of banks are currently reassessing their core banking platforms, with portability and interoperability cited as top criteria. Meanwhile, regulators worldwide are pushing for stronger data rights. The European Union’s PSD3, expected to come into force later this decade, will likely mandate that banks provide seamless data export. In the United States, the Consumer Financial Protection Bureau’s Section 1033 rulemaking is also pushing for open banking standards.

Yet compliance is only the floor. Banks that view openness as a competitive advantage are already ahead. They are building modular architectures where a customer can, in theory, plug in a third-party budgeting tool, switch their mortgage provider, or move their savings account without ever having to re-enter personal data. These institutions understand that closed systems may protect short-term margins, but they erode long-term trust. As one industry analyst put it, “If your customers can’t go elsewhere because their data and interfaces are locked to your vendor’s systems, you’re not really in control—you’re just the gatekeeper of a walled garden that’s increasingly seen as hostile territory.”

Forward-Looking Conclusion: The Next Wave of Openness

The true meaning of 'open' in banking is still evolving. What began as a regulatory requirement is quickly becoming a strategic differentiator. In the coming years, we can expect to see more banks treating open interfaces not as a cost of doing business but as the foundation for new revenue streams—such as data-portability-as-a-service or white-label banking widgets. The partnerships forged with consortia will only grow stronger, with more institutions contributing to the very standards they rely on.

Ultimately, the banks that thrive will be those that embrace the paradox: by making it easy for customers to leave, they make it compelling for them to stay. And that, perhaps, is what 'open' really means—not just for banking, but for the future of financial services.