Open Banking vs PSD2

Open Banking is a secure way to give Third Party Providers (TPPs) access to your financial information.

Payment Service Directive 2 is the legal driving force behind Open Banking. It is the EU legislation that has forced the provision of Open Banking APIs.

How is Open Banking different from PSD2?
You can think of PSD2 as the requirement and Open Banking as the solution. PSD2 solely concerns the legal requirements that EU countries transposed into their national law.

In the provision of PSD2, the EU specifically did not mandate how the solution would be provided. However, it did agree the Regulatory Technical Standards about what additional 2 Factor Authentication is needed for payments.

Open Banking covers the entire solution of how TPPs can safely extend your banking service. In the UK, it can mean Open Banking Ltd. The Competition and Markets Authority set up the Open Banking Implementation Entity (OBIE) in 2016. OBIE was renamed Open Banking Ltd. This was to provide a common standard for Open Banking in the UK.