Open Banking is the practice of letting regulated third parties access a customer’s financial data—with the customer’s explicit consent—via secure APIs. Instead of screen-scraping or manual uploads, banks expose accounts, balances, and transactions through standardised interfaces. That enables account aggregation, smarter lending, instant verification, and payment initiation from the user’s bank.
Where did it start?
In Europe, the Revised Payment Services Directive (PSD2) and the UK’s Open Banking standard forced banks to provide secure API access to licensed Third Party Providers (TPPs). Similar frameworks exist or are emerging in other regions. The core idea is the same: the customer says “yes” to sharing data or initiating a payment, and the TPP interacts with the bank in a secure, auditable way.
Why it matters in Pakistan
Pakistan has a large, young population and growing digital adoption. Open Banking–style flows can power:
- Lending and underwriting — Income and cash-flow verification using real account data instead of paper.
- Personal finance apps — One dashboard across multiple banks and accounts.
- Payments and disbursements — Initiate payments from the user’s bank with consent and strong authentication.
- KYC and onboarding — Verify identity and account ownership in a single, compliant flow.
Building this requires the full auth journey: consent in your app, redirect to the bank, Strong Customer Authentication (SCA), callback, and token exchange. At FintechPaa we design and build that flow for our clients—so your product can aggregate accounts and data without reinventing compliance from scratch.
The shift to consent-based data sharing
The old model was “give us your login and we’ll scrape.” The new model is “you consent, we use a secure API and the bank authenticates you.” That’s better for security, regulation, and user trust. Consent can be granular (e.g. “accounts and balances only” or “also transactions”) and revocable. Audit trails and SCA are built in. That’s the flow we implement when we build open banking systems for clients like Meras and Infinipi.
If you’re planning an open banking–powered product in Pakistan or beyond, we can build the auth flow, consent, and integration for you. Get in touch to discuss your use case.
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