Open banking is no longer confined to European regulations or experimental tech pilots—it’s actively reshaping the U.S. financial landscape. What’s driving this evolution isn’t top-down mandates but a fast-emerging, market-led open banking strategy that prioritizes data rights, consumer choice, and digital-first innovation. As banks and fintechs race to stay relevant, open banking is becoming a cornerstone of competitive differentiation—built on trust, transparency, and seamless connectivity.
At Money 20/20, the conversation made one thing clear: open banking is here, and it’s accelerating. From scalable API frameworks to permissioned data sharing and strategic fintech partnerships, financial institutions of all sizes are being pushed to modernize. The race isn’t just to meet regulatory expectations—it’s to lead the next era of financial services.
From Regulation to Market Response
Unlike Europe’s PSD2 model, which mandated banks to provide secure access to customer data via APIs, the U.S. has taken a market-first approach. Fintechs like Plaid emerged out of necessity, bridging the gap between traditional financial institutions and new digital use cases like peer-to-peer payments and budgeting apps.
Initially, fintechs had to build custom integrations with each bank. It was inefficient and complex. Companies like Plaid simplified this with standardized, secure connections, helping consumers do what they want with their data—whether it’s applying for a mortgage or connecting their accounts to a robo-advisor.
As fintech use cases proliferated, consumer demand accelerated. The appetite for seamless digital experiences made the case for open banking stronger than any regulation could.
The Role of Strategic Partnerships
The key to scale in the U.S. model is collaboration. The partnership between Fiserv and Plaid is a clear example. Instead of requiring every small community bank to build direct integrations with every fintech, this model offers secure, standardized connectivity out of the box.
This helps smaller banks and credit unions punch above their weight. They get access to the same fintech ecosystem as larger institutions without having to build or maintain complex API frameworks themselves. The result? Consumers at smaller banks can now access digital services at the same level—or better—than customers at national banks.
This democratization of technology levels the playing field. It also highlights the urgency for all institutions, regardless of size, to prioritize open banking strategies.
Why Data Permissioning Matters
At the heart of open banking is the belief that consumers own their financial data. Not the bank. Not the aggregator. The customer.
This shift has sparked innovations around permissioning—giving users the ability to share or revoke access to their financial data as needed. For instance, someone might want to share data with a mortgage provider during the application process but revoke that access once the loan closes. Today, that kind of control is possible, and it’s reshaping how institutions think about data privacy.
Permissioned access is more than a feature—it’s the foundation of trust. As regulation evolves, it’s expected that these capabilities will become table stakes. Financial institutions that fail to provide this level of transparency and control will fall behind.
Standardization and Scale with APIs
One of the most exciting developments in the U.S. open banking landscape is the move toward standardization via the Financial Data Exchange (FDX). API adoption has accelerated significantly in the past two years, with Plaid now reporting over 75% of its data access happening through APIs.
This isn’t just a technical improvement—it’s a win for security, scalability, and operational efficiency. APIs reduce reliance on less secure methods like screen scraping and create a cleaner, more reliable flow of data. They also simplify compliance and future-proof infrastructure.
As more banks adopt API connectivity, the entire ecosystem becomes more robust and resilient.
The Case for Action: ROI Is Relevance
Many smaller institutions still believe open banking is only for large banks or tech-forward organizations. But this mindset can be risky. Delaying an open banking strategy may result in customers quietly shifting assets elsewhere.
Today’s consumers expect to connect their accounts to personal finance apps, wealth platforms, and payment tools. If they can’t, they’ll find a provider who lets them. This is the long-term risk—losing relevance, one disconnected customer at a time.
Regulators are watching too. Although the U.S. started as a market-led model, rulemaking under CFPB’s Section 1033 is expected soon. The financial institutions that act early—either through direct FDX integrations or through partners like Fiserv—will be better prepared for compliance and customer expectations alike.
How Smaller Banks Can Compete
The good news is that smaller banks don’t have to build everything themselves. Options exist:
- Partner with aggregators that already support secure, standardized API connectivity.
- Build in-house APIs aligned to FDX standards, if technical resources allow.
- Leverage platforms like All Data Connect that sit between banks and fintechs, ensuring secure transmission and compliance-friendly data management.
Banks also need to plan for more than just connectivity. They should consider how to handle digital identity, permissioning infrastructure, and evolving consumer expectations around data transparency.
Starting small—perhaps by enabling connectivity for just a few key use cases—can create early wins. And as regulations firm up, these foundations will pay off.
Lessons from Europe—and a Uniquely American Model
Europe’s PSD2 journey taught the fintech world two big lessons:
- Mandates work—but they come slowly.
- Standardization accelerates adoption.
The U.S. model, by contrast, has shown that innovation can thrive without top-down mandates—if partnerships and incentives align.
The key takeaway? Financial institutions must be proactive, not reactive. Innovation isn’t waiting for a policy memo. The apps are already here. The users are already connected. Open banking isn’t coming—it’s happening now.
