In recent years, new terms and concepts have emerged around Open Banking and Open Finance, making it more crucial than ever to keep up with the latest developments and trends in the industry.
Given the constant evolution of technology and regulatory changes, these terms might appear unfamiliar to many. We’ve created this extensive glossary to assist you in comprehending and staying up-to-date with the language of financial innovation.
Let’s now explore the key terminology of Open Banking and Open Finance!
It involves the collection and consolidation of financial information from various accounts held by an individual or a business. This can include bank accounts, investment accounts, and other financial assets, providing users with a centralized view of their financial data through a single platform.
Account Information Service Provider
Regulated entity that offers services to customers by accessing their bank account information with their permission, enabling financial data analysis and management.
Account Servicing Payment Service Provider
Regulated organization responsible for servicing customer accounts and facilitating payment transactions.
Account to account
Transferring funds electronically between two bank accounts without the need for physical cards, using methods such as credit transfers, instant payments, and direct debits.
Information and data exchanged through Application Programming Interfaces (APIs) to enable communication and integration between different software systems.
Entity that offers APIs, which allow developers to access and interact with its services or data, often for building third-party applications.
Individual or entity that uses APIs to interact with external services or data, enabling the integration of functionalities into their applications.
Application Programming Interface (API)
Set of rules and protocols that allow different software applications to communicate and interact with each other, enabling data and function sharing.
Business Identifier Code (BIC)
BIC, also known as the SWIFT address, is an alphanumeric code assigned to financial institutions. It facilitates the swift and accurate transmission of automated payments to the respective banks, providing distinctive identification of the bank’s name and location.
Measures or actions implemented by the Competition and Markets Authority to address issues related to competition, consumer choice, and pricing within markets.
The nine major banks and building societies in the UK that are subject to Open Banking regulations and requirements as mandated by the CMA.
- Bank of Ireland (UK) pls.
- Barclays Bank pls.
- HSBC Group
- Lloyds Banking Group pls.
- Nationwide Building Society
- Northern Bank Limited, trading as Danske Bank
- The Royal Bank of Scotland Group pls.
- Santander UK plc, in Great Britain and Northern Ireland
Organization or entity with the authority to regulate and oversee specific aspects of financial services, often related to consumer protection and market stability.
Confirmation of Payee (CoP)
A security feature used in payment transactions to verify that the recipient’s name matches the account details, reducing the risk of sending funds to the wrong recipient.
In the context of financial services, it often relates to obtaining and managing user consent for sharing financial information with third-party services, ensuring compliance with privacy regulations and giving individuals control over their data.
Data Protection and Digital Information (DPDI)
Legislative proposal aimed at regulating data protection and digital information management within a specific jurisdiction.
Set of guidelines and specifications used to structure and format data consistently, facilitating data exchange and interoperability between systems.
A Directory, in the context of open banking, typically refers to a centralized database or registry that contains information about authorized service providers, facilitating data sharing and access.
European Banking Authority (EBA)
The European Banking Authority, or EBA, is a regulatory agency of the European Union responsible for creating and maintaining a single rulebook for banking and financial services in the EU. It plays a significant role in shaping regulations and standards related to Open Banking within the EU.
EBA Regulatory Technical Standards
Regulations and technical guidelines set by the European Banking Authority (EBA) to ensure consistent and effective implementation of banking regulations across the European Union.
General Data Protection Regulation
Comprehensive European Union regulation that governs data protection and privacy for individuals within the EU and the European Economic Area (EEA).
It’s the process of compiling and organizing multiple invoices from different sources into one single platform. This simplifies financial management for businesses by offering a centralized location for reviewing, tracking, and managing invoices, streamlining the payment process.
A Mandatory ASPSP is an Account Servicing Payment Service Provider that is required to provide open banking services and data access, often due to regulatory mandates.
An Open API is an Application Programming Interface that is publicly available and accessible for third-party developers, encouraging integration with external services and data.
Open Banking Ecosystem
The Open Banking Ecosystem includes all the participants, services, and technologies involved in open banking, promoting data sharing and innovation in financial services.
Open Banking Services
Open Banking Services are financial products and services made available through open banking APIs, enabling consumers to access their financial data and perform transactions securely.
Open Data refers to data that is publicly accessible, shareable, and often subject to open licensing terms, promoting transparency and innovation.
Open Finance is an extension of open banking that encompasses a broader range of financial services, including insurance, investments, and more, with a focus on data sharing and consumer benefits.
Payment Services Provider
A Payment Services Provider is an entity that offers various payment services, such as processing transactions, managing accounts, and providing payment-related solutions.
Payment Services Regulations
Payment Services Regulations are legal requirements and rules governing the provision of payment services within a specific jurisdiction, often related to consumer protection and market competition.
PSD2 is a European Union regulation designed to enhance the security and efficiency of electronic payments within the EU. It promotes competition and innovation in the financial sector by opening up access to payment services, encouraging the use of secure electronic payment methods, and introducing strong customer authentication measures.
PSD3 is a new package of measures designed to address more effectively the latest challenges of electronic payments within the EU. Although it’s still a draft, it covers consumer protection, monitoring of non-bank payment service providers (PSPs), open banking activities, etc.
Revised Payment Services Directive
The Revised Payment Services Directive (PSD2) is a European Union directive that regulates payment services and promotes innovation and competition in the financial industry.
Smart data refers to data that has been processed, analyzed, and transformed into meaningful insights, often used for decision-making and business optimization.
Smart Data Council
The Smart Data Council is an organization or body responsible for overseeing the use and management of smart data, promoting its value and benefits.
Strong Customer Authentication
Strong Customer Authentication (SCA) is a security measure that requires customers to provide multiple forms of authentication to verify their identity during certain online transactions.
Sweeping, in the context of open banking, typically refers to the automatic movement of funds between accounts for specific purposes, such as saving or debt repayment.
Technical Service Provider
A Technical Service Provider is an entity that offers technical services and solutions to support the implementation and operation of various technologies and systems.
Third-Party Information Aggregation
It refers to the collection and integration of data from external sources by a third-party service. This could include aggregating data from various sources to provide users with comprehensive insights, analytics, or personalized services.
Third Party Provider
A Third Party Provider, or TPP, is an organization or service that offers financial products or services on behalf.