Top 10 Myths about Open banking services in 2025 Debunked

Introduction

The financial industry is shifting towards Open banking services, offering businesses greater access to financial data and payment services. However, misconceptions about open banking continue to create doubt among businesses, fintech startups, and developers.

Some assume that it is only for large banks, while others worry about security risks or complexity. These misunderstandings prevent many businesses from leveraging the benefits of open banking.

In this blog, we will debunk ten common myths about Open banking services and explain how Finexer delivers secure and compliant open banking solutions.

1: Open banking services Is Only for Large Banks

Reality:

Open banking was introduced to increase competition in financial services, making it accessible to fintechs, accounting platforms, ERPs, and small to medium-sized businesses (SMBs)—not just banks.

Why This Myth Exists:

• Many businesses assume Open banking services is exclusive to large financial institutions with extensive resources.
• The term “banking” gives the impression that it is only relevant for banks.

The Truth:

• Open banking providers offer regulated APIs that allow SMBs and fintech startups to access real-time financial data, automate reconciliation, and process payments securely.
• Businesses no longer need direct banking partnerships to access financial data—third-party providers like Finexer handle secure integrations.

How Finexer Helps:

• Finexer’s open banking APIs are built for SMBs, fintech startups, and accounting firms, allowing them to connect with UK banks easily.
• Businesses can access financial data and initiate payments without requiring direct agreements with banks.

2: Open Banking Poses Security Risks

Reality:

Open banking operates under strict UK and EU regulations, making it more secure than older methods like screen scraping or manual data entry.

Why This Myth Exists:

• Some believe Open banking services involves sharing passwords or losing control of financial data.
• There is a lack of awareness about the security standards that open banking providers follow.

The Truth:

• Open banking services are regulated under PSD2 and FCA guidelines, requiring strong security measures such as multi-factor authentication (MFA), tokenised access, and end-to-end encryption.
• Businesses and customers authorise specific data access, ensuring that only approved transactions occur through secure consent-based models.

How Finexer Ensures Security:

• Regulatory Compliance: Finexer is fully FCA-regulated, meeting all UK open banking security standards.
• Encryption & Secure Authentication: Data is protected through secure API authentication methods without exposing sensitive credentials.
• Fraud Prevention: Advanced security layers detect and block unauthorised access attempts.

3: Consumers Don’t Trust Open Banking Providers

Reality:

According to the latest data released by the Open Banking Implementation Entity (OBIE) in early 2024, over 7 million UK consumers are now actively engaging with open banking services. This reflects a robust increase from previous years, as consumers continue to embrace secure data sharing in exchange for personalised financial services.

Why This Myth Exists:

• Many consumers are unaware that they are already using open banking-powered services.
• Some associate open banking with data sharing risks, despite the strict security measures in place.
• Traditional banks have historically held customer financial data, and the shift to Open banking services is still relatively new.

The Truth:

• UK open banking adoption is rising, with the Open Banking Implementation Entity (OBIE) reporting that over 7 million people now use open banking-powered services.
• A growing number of businesses, from fintech apps to accounting software, rely on open banking providers to offer secure payment and data-sharing services.
• Consumers only authorise specific data access, meaning they retain complete control over what is shared and for how long.

How Finexer Supports Consumer Adoption:

• FCA-regulated compliance ensures Finexer meets all security and privacy standards.
• Easy integration allows businesses to provide transparent consent flows, increasing user confidence.
• Secure API infrastructure ensures that customer data is protected against fraud and unauthorised access.

4: Open Banking Is Too Complex for SMEs & Startups

Reality:

With the right open banking provider, businesses can integrate banking APIs without requiring deep technical expertise or high development costs.

Why This Myth Exists:

• Open banking services involves APIs, which may seem technical to non-developers.
• Some businesses assume they need in-house banking partnerships or extensive compliance knowledge.

The Truth:

• Open banking providers like Finexer simplify integration with plug-and-play APIs that require minimal setup.
• Small businesses can access real-time banking data, transaction history, and instant payments without building their own financial infrastructure.
• Many accounting and ERP platforms already use Open banking services for automated reconciliation and financial insights.

How Finexer Simplifies Open Banking for Businesses:

• Developer-friendly APIs allow businesses to integrate Open banking services with minimal effort.
• Comprehensive support & documentation ensure smooth onboarding.
• No need for direct bank agreements—Finexer handles compliance and connections with UK banks.

5: Open Banking Is Only About Payments

Reality:

Open banking services is not limited to payments—it also enables businesses to access financial data, transaction categorisation, account verification, and lending insights.

Why This Myth Exists:

• Many discussions around Open banking services focus on payment initiation services (PIS), leading to the misconception that payments are the only function.
• Businesses may not be aware of account information services (AIS), which allow for financial data aggregation.

The Truth:

• Account Information Services (AIS): Businesses can access real-time account balances, transaction history, and spending patterns, helping with financial management and credit scoring.
• Identity & Verification: Open banking is used for secure bank account verification, reducing fraud and simplifying onboarding processes.
• Lending & Credit Analysis: Lenders use open banking data to assess affordability and creditworthiness based on real-time financial insights rather than outdated credit reports.

How Finexer Expands Open Banking Beyond Payments:

• AIS & PIS services allow businesses to offer both data aggregation and payment functionality.
• Bank account verification APIs ensure that businesses can verify users’ financial details securely.
• Real-time insights support accounting, lending, and financial management applications.

6: Open Banking Will Replace Traditional Banks

Reality:

Open banking does not replace traditional banks; instead, it works alongside them to improve financial services. Banks remain the core providers of financial infrastructure, while open banking providers enable businesses to securely access banking data and initiate transactions.

Why This Myth Exists:

• Some assume that open banking eliminates the need for banks by allowing businesses to connect directly to financial services.
• The rise of fintechs has led to speculation that banks will become obsolete.

The Truth:

• Banks remain essential for holding customer funds, providing lending services, and ensuring financial stability.
• Open banking providers collaborate with banks by offering secure APIs that enable businesses to access financial data without replacing banking institutions.
• Many banks themselves use open banking APIs to offer improved services.

How Finexer Works with Banks & Fintechs:

• Direct partnerships with UK banks allow businesses to access financial data without bypassing traditional banking infrastructure.
• Secure data-sharing models ensure that banks, fintechs, and businesses all benefit from open banking without disruption.

7: Open Banking Is Expensive to Implement

Reality:

Many businesses assume that adopting Open banking services requires high development costs and complex compliance efforts. However, with the right open banking provider, businesses can access banking APIs without significant upfront investment.

Why This Myth Exists:

• Traditional financial integrations required custom-built solutions, which were expensive and time-consuming.
• Some businesses assume they need direct agreements with banks, increasing perceived costs.

The Truth:

• Open banking providers like Finexer handle compliance and technical integrations, reducing development time and costs for businesses.
• Businesses can access real-time banking data and payments through APIs without needing a direct banking license.
• Many open banking solutions offer pay-as-you-go models, making it cost-effective for SMEs and startups.

How Finexer Lowers the Cost of Open Banking Integration:

• No need for direct bank contracts—Finexer handles compliance and connections.
• Flexible API pricing models ensure businesses only pay for what they use.
• Pre-built SDKs and documentation reduce development time, making implementation faster and more affordable.
• Finexer can save up to 90% on transactions

8: Open Banking Requires Lengthy Deployment Times

Reality:

Some businesses hesitate to adopt open banking because they assume that API integrations take months. While traditional banking integrations used to be slow, modern open banking providers have significantly reduced deployment times.

Why This Myth Exists:

• Legacy banking integrations used to require long approval and compliance processes.
• Some businesses assume integrating open banking APIs means dealing with complex financial regulations on their own.

The Truth:

• Modern open banking providers deploy significantly faster than traditional banking integrations.
• Businesses no longer need to go through complex direct agreements with banks—open banking providers handle the connections.
• Implementation depends on the provider—some require months, while others deliver rapid deployment.

How Finexer Speeds Up Open Banking Integration:

• Deploys 3x faster than the market average, allowing businesses to integrate open banking APIs with minimal downtime.
• Pre-built SDKs and developer-friendly documentation enable faster technical implementation.
• End-to-end compliance and bank connectivity handled by Finexer, removing delays caused by regulatory approvals.

9: Open Banking Providers Have Limited Coverage

Reality:

Some businesses assume that open banking providers only support a small number of banks, making it difficult to access financial data or initiate payments across different institutions. However, coverage varies by provider, and leading platforms ensure broad connectivity across financial institutions.

Why This Myth Exists:

• Open banking is still expanding, and some early providers had limited bank connections.
• Businesses unfamiliar with open banking may assume that only a few major banks support it.

The Truth:

• In the UK, all major banks are required to provide open banking APIs under PSD2 regulations.
• Leading open banking providers offer nationwide coverage, enabling businesses to connect with multiple financial institutions.
• Open banking providers don’t just support payments—they also offer account data access, verification services, and real-time financial insights.

How Finexer Ensures Broad Bank Coverage:

• Covers 99% of UK banks, ensuring businesses can access financial data and initiate payments across nearly all financial institutions in the country.
• Supports AISP (Account Information Services) and PISP (Payment Initiation Services) to provide businesses with both data aggregation and payment functionality.
• Continuously expanding bank integrations, ensuring businesses have access to the financial institutions they need without additional development work.

10: Open Banking Will Be Replaced by Newer Technologies Soon

Reality:

Open banking is not a passing fad—it is a regulated framework backed by UK and EU policies. Rather than being replaced, open banking is evolving alongside emerging financial technologies.

Why This Myth Exists:

• Rapid fintech innovation fuels speculation about “the next big thing.”
• Some assume new payment methods will make open banking obsolete.

The Truth:

• Open banking is here to stay under current PSD2 rules and upcoming PSD3 updates.
• Banks and fintechs are investing heavily in open banking, reinforcing its long-term role.
• It integrates with other financial technologies (e.g., embedded finance, real-time payments) rather than displacing them.

How Finexer Adapts to the Future of Open Banking:

• Strategic Growth Partners: We continually optimise your open banking setup so you can adopt new financial innovations as they emerge.
• White-Label Platform: Remain agile with a platform that evolves alongside fintech advancements, ensuring your brand and offerings stay competitive.
• Scalable Solutions: Regularly updated APIs and regulatory compliance keep you aligned with the latest open banking requirements.