Open Banking and PSD2: A Financial Planning Guide for HNW Individuals

Open banking is one of the most significant structural changes to UK retail banking in decades. Since its implementation in 2018 under the Payment Services Regulations (which transposed the EU's second Payment Services Directive, PSD2, into UK law), banks have been required to open their data and payment infrastructure to authorised third parties. The practical result is a growing ecosystem of applications that can give individuals and their advisers a consolidated, real-time view of their financial position — and make payments directly from bank accounts without using traditional card networks.

For HNW individuals managing accounts across multiple banks, currencies, and jurisdictions, the implications are material.

What Is Open Banking?

At its core, open banking is a framework that allows authorised third-party providers (TPPs) to access bank account data and initiate payments on behalf of customers, subject to the customer's explicit consent.

This access is provided via standardised application programming interfaces (APIs) — secure connections that allow authorised applications to retrieve account information or trigger payments without the customer sharing their bank login credentials directly with the third party. The APIs are established by the banks themselves and must conform to standards overseen, in the UK, by the Open Banking Implementation Entity (OBIE).

Open banking does not give any third party automatic or ongoing access to your accounts. Each connection requires your explicit authorisation, typically renewed every 90 days (for account data) or per transaction (for payments). You can revoke consent at any time, from either the third-party application or directly through your bank.

Two Types of Open Banking Services

Open banking regulation distinguishes between two primary service types:

Account Information Services (AIS): Applications that read your transaction data and balance information across one or more banks. You authorise the application to view data — it cannot move money. Examples include account aggregation apps, spending analytics tools, and adviser reporting platforms.

Payment Initiation Services (PIS): Applications that trigger bank-to-bank payments directly from your account. These bypass card networks entirely, reducing transaction costs and settlement times. You authorise each payment individually. Examples include some e-commerce checkout options and instant bank transfer services.

FCA Authorisation for Third-Party Providers

Any firm operating an open banking service in the UK must be authorised or registered with the Financial Conduct Authority (FCA). Authorised payment institutions (APIs) and registered account information service providers (RAISPs) are subject to FCA oversight and must maintain appropriate security standards, data protection obligations, and complaint procedures.

Before connecting any application to your bank accounts, verify that the provider is FCA-authorised or registered. The FCA register is publicly searchable at register.fca.org.uk. A legitimate open banking provider will display their FCA registration number clearly and can be verified in seconds.

Do not grant account access to any application that is not on the FCA register, regardless of how professional its appearance. The security and regulatory protections that come with FCA authorisation are significant.

Account Aggregation for HNW Individuals

For individuals with accounts at multiple UK and international banks, account aggregation is perhaps the most immediately useful open banking application.

Aggregation platforms connect to multiple bank accounts (and in some cases investment accounts, credit cards, and pensions) via open banking APIs, presenting all information in a single dashboard. This eliminates the need to log in to five or six separate banking portals to understand your financial position.

Leading UK aggregation platforms include:

Moneyhub: Particularly strong for HNW and professional users. Integrates current accounts, savings, investments, property values, and pensions. Used by financial advisers as a client-facing planning tool. Supports manual asset entry for accounts not API-connected.

Money Dashboard: Strong on transaction categorisation and spending analytics. Well-suited for individuals who want detailed visibility of outgoings across multiple accounts.

Snoop: Focused on identifying savings opportunities — suggests when you could get better rates, flags subscriptions, and alerts to rate changes on savings accounts.

For international accounts — UAE, Singapore, Switzerland, Cyprus — open banking connectivity is more limited. Most international banks do not participate in the UK open banking framework, and manual account entry or CSV import is typically required for overseas accounts.

Spend Analytics and Adviser Data Sharing

For HNW clients with wealth management relationships, open banking enables richer data sharing with advisers. Rather than providing quarterly bank statements on request, a client can grant their adviser secure, API-based read access to transaction data across multiple accounts. This allows the adviser to:

• See actual cash flow patterns rather than estimated figures
• Identify large cash balances that could be deployed more efficiently
• Prepare for review meetings with current, accurate account information
• Spot anomalies — unusual outflows, missed payments, unexpected debits — without the client needing to review statements manually

This capability is particularly valuable for clients with multiple advisers (investment, tax, property) who each need a coherent picture of financial position.

Payment Initiation Services: Bank-to-Bank Transfers

Payment initiation services allow payments to be made directly from a bank account to a recipient, without the need for a debit card, credit card, or payment intermediary. The payer authorises each transaction individually through their bank's authentication process (typically biometric or PIN), and funds are transferred via the Faster Payments or CHAPS network.

For HNW individuals, the most relevant use cases for PIS are:

• High-value purchases where a bank transfer is preferred to a card payment (typically £50,000+ transactions where card limits apply)
• Online purchases where sharing card details with a retailer carries security risk
• Recurring large transfers to professional service providers, where establishing a standing order is disproportionate

PIS does not replace SWIFT or CHAPS for international transfers — it operates within the UK domestic payment infrastructure.

Data Security: OAuth, Not Credential Sharing

A critical security principle of open banking is that it operates via OAuth authentication — a standard that allows you to authorise access without sharing your bank login credentials with the third party.

When you connect an aggregation app via open banking, you are redirected to your bank's own authentication page to grant permission. The third party never sees your username and password. If any application asks you to enter your bank login credentials directly into its own interface, it is not using open banking — it is using screen scraping, which is a fundamentally less secure approach and which FCA-regulated banks may soon block entirely.

Always check that the authorisation journey redirects you to your bank's own website or app before entering any credentials.

PSD3 and Future Developments

The EU is implementing PSD3, a further evolution of the payments directive that strengthens consumer protections, expands open banking scope to include investment and savings accounts (not just current accounts), and introduces enhanced liability rules for payment fraud. Although the UK is no longer subject to EU law post-Brexit, UK regulators typically track EU developments closely and have indicated plans to develop a "smart data" framework that extends open banking principles to further financial data categories.

The trajectory is clear: over the next five years, the scope of data that can be shared via APIs will expand, and the ability to obtain a comprehensive, automated financial picture across all accounts will become more complete.

What Open Banking Cannot Do

It is important to be clear about what open banking does not provide:

• It does not connect to international banks outside participating networks
• It does not give third parties the ability to make payments without your per-transaction authorisation
• It does not currently extend to savings accounts at all institutions (coverage is expanding but not complete)
• It does not, in itself, protect you against authorised push payment (APP) fraud — though a separate Payment Systems Regulator mandatory reimbursement scheme has, since 7 October 2024, required sending and receiving banks to reimburse most APP fraud victims (up to £85,000 per claim, with the cost split 50/50 between the two firms)

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This guide is for general information only and does not constitute financial or legal advice. Open banking regulations and technology are evolving rapidly. Always verify the FCA authorisation status of any open banking service provider before connecting accounts. Consult an independent adviser for personalised financial planning.

How Global Investments Can Help

Global Investments works with clients to implement consolidated financial reporting across their full asset and banking picture — including the use of authorised open banking connections where available, and manual aggregation for accounts not covered by UK APIs.

For clients with complex multi-jurisdiction banking structures, we can facilitate adviser-level data sharing through appropriate platforms, enabling more informed financial planning conversations without the manual burden of assembling statements from multiple institutions. Speak with our team to understand how open banking tools can support your financial oversight.