Banks, credit unions are on the precipice of an open finance shift

American Banker's 2026 State of Open Finance Adoption Report

This item is the second in a series diving into new data from American Banker, so click the link below to read the previous part.

• Part one: Are banks welcoming open finance with open arms?

Where are banks currently at in the open finance adoption road map?

The concept of open finance, like other financial technology efforts, requires a significant amount of planning and exploration before diving in. Many institutions it seems are still in the planning phases.

On the whole, most respondents said their institutions were currently assessing the opportunities afforded by open finance by evaluating market trends, customer needs and the surrounding regulatory landscape. Assessors accounted for 33% of community bankers, 38% of regional bankers, 26% of national bankers and 59% of credit union executives.

The lingering uncertainty surrounding the Consumer Financial Protection Bureau's interim 1033 open banking rule leaves many executives at a crossroads when considering what their institution's open finance future might look like. While the legal challenges play out in court, banks and credit unions alike are holding fast on data sharing initiatives.

The next greatest share of respondents said their organization is currently developing its strategy for adopting open finance, which involves setting key objectives, building out business cases and securing buy-in from leadership. This group includes 13% of community bankers, 32% of regional bankers, 23% of national bankers and 14% of credit union leaders.

Few survey respondents have reached the stage where their institutions have fully integrated open finance products into business procedures. This pool of respondents features 11% of community bankers, 2% of regional bankers, 5% of national bankers and no credit union leaders.

At least one company that was poised to help banks move deeper into open banking has scaled back.

In August, Bloomberg reported that Visa was purportedly placing its U.S. open banking product on pause over concerns of regulatory volatility in the space and potentially higher costs of doing business.

Chris Miller, senior director at Cornerstone Advisors, told American Banker that the move "highlights just how unsettled the space still is" and how changing laws and fees "could definitely slow adoption, especially for smaller players that can't afford compliance missteps."

"That said, the underlying demand for open banking and embedded payments isn't going away; consumers and businesses both expect smoother, more integrated financial experiences," Miller said.

Key takeaway: Most institutions are still in the exploration and planning phases of open finance road-mapping.

What tools are banks using to build data pipelines?

The financial industry has been migrating from screen scraping – where data aggregators obtain a consumer's login credentials, log in as them and copy and paste financial data into an external app – to APIs with protocols and underlying contracts both parties agree to. 

At least a quarter of all banking respondents said their institutions allow third-party firms access to customer financial data exclusively through APIs. This group includes 25% of community banking respondents, 39% of regional bankers, 43% of national bankers and 20% of credit union leaders.

One-third of all respondents say their institutions allow data sharing via APIs or screen scraping depending on the third party. 

Screen scraping creates vulnerabilities, for instance by making it harder for banks to distinguish true customer traffic from that of aggregators or fraudsters. APIs are not completely secure either, so institutions need to conduct a fair amount of due diligence before selecting the best option.

Almost half (49%) of community bankers allow data sharing through screen scraping and APIs, as do 53% of regional bankers, 37% of national bankers and 44% of credit union executives.

Those whose institutions don't offer APIs totaled 11% for community banks, 6% for regional banks, 2% for national banks and 12% for credit unions.

Rahul Sharma, senior project manager for U.S. Bank, told American Banker that APIs are the foundation of the "open banking revolution" and that institutions need to "balance the need for consistent, secure API standards with the flexibility to innovate."

"The smartest players are taking cues from Silicon Valley, treating their APIs like actual products, not just technical plumbing," Sharma said. "That means investing in things like slick developer tools, crystal-clear guides and serious support teams to help partners succeed."

Key takeaway: Larger institutions were power users of APIs, while community banks and credit unions employ a mix of APIs and screen scraping.

Risk management, API upkeep are holding back open finance adoption

Third-party risk management, building data access agreements and more all stand in the way between banks and open finance programs.

The most significant challenge facing bank and credit union open finance initiatives is conducting third-party risk management, according to 34% of respondents. Second is establishing data access agreements, cited by 25%, followed by ongoing maintenance and upgrades of APIs (20%) and support and management of third-party firms seeking access (18%).

The rise of data sharing through APIs, while not new, has exposed financial institutions to a swath of new vulnerabilities. Hackers seeking to steal consumer data oftentimes are more successful when targeting third-party partner systems rather than attempting to breach a bank's defenses directly.

More than half (58%) of respondents said oversight and support for outside firms seeking direct access to consumer financial data presents a moderate challenge to further initiatives. API maintenance was seen as a moderate challenge by 52% of respondents, third-party risk management by 43% and data access agreements by 42%.

A small share of respondents saw all four components of open finance as no challenge. Six percent of respondents said third-party access support was not a challenge for their institution and 3% for the other three categories individually said the same.

Teresa Walsh, former head of the Financial Services Information Sharing and Analysis Center's global intelligence office, told American Banker that when it comes to APIs, more players involved in the data exchange means more chances for vulnerabilities.

"These attackers are opportunistic, and they will try everything under the sun," Walsh said. "If there is even a little bit of an open hole, they'll go after it. That's why we always talk about testing. That's why red teams exist. That's why you have penetration tests. You're always trying to test out the API."

Key takeaway: Third-party risk management is a major challenge facing open finance programs.

Are banks, credit unions ready, willing and able for APIs?

Roughly 70% of respondents agreed their institution has the right technology infrastructure in place to participate in open finance. Thirteen percent neither agreed nor disagreed with the sentiment and 16% said their institutions were not technologically prepared.

Technological preparedness isn't a one-size-fits-all metric. While some banks have the economies of scale to build out open finance programs in-house, others are enlisting the help of specialist fintech firms to either enhance or replace legacy systems.

Most respondents (73%) said they have the tech in place to support large volumes of API calls.

Sixty-seven percent agreed to some degree that their institutions treat APIs as core products internally.

Seventy percent of bankers agreed that internal teams within their organizations are actively using APIs that are shared with third-party entities.

Most respondents (80%) said their institutions consume data from third-party APIs. 

Industry experts like Susan Foulds, managing director at competitive intelligence firm Keynova Group, say that open banking can help close the gap between institutions in the race for consumer acquisition.

"Open banking has the potential to enable smaller institutions to compete more effectively with their larger peers, fostering healthy competition within the industry," Foulds told American Banker. "The regional and community banks and credit unions that acknowledge this and seize open banking opportunities beyond aggregated consumer data will position themselves to capitalize on the possibilities."

Key takeaway: APIs are an important internal tool for data consumption, with many respondents confident they can support more.

Open finance is driving growth initiatives at financial institutions

Open finance is starting to crystallize in bankers' minds as the next frontier for expansion, leading executives to determine what partnerships and strategies are necessary for adopting new technology.

Executives seeking to adopt open finance programs should be mindful that data passing outside of the institution opens up a new realm of cybersecurity challenges. If these are left unchecked, institutions are open to breaches and subsequent lawsuits from consumers and regulators alike.

Roughly 72% of respondents agreed that their institution sees open finance as a strategic growth opportunity, while 25% neither agreed nor disagreed and 3% disagreed.

On if their institution has a clear strategy for monetizing data and APIs, 60% of respondents agreed, 18% neither agreed nor disagreed and 23% disagreed.

Sixty-nine percent of respondents agreed that their institutions formed partnerships with fintechs as part of growth strategies, while 17% neither agreed or disagreed and 14% disagreed.

Lastly, 77% of bankers and credit union leaders agreed that executive leadership within their institution is supportive of open finance initiatives. Roughly 19% neither agreed nor disagreed and 3% disagreed.

Key takeaway: On the whole, executive leadership is on board with pursuing open finance initiatives.

Opening the floodgates of open finance

Financial institution executives perceive themselves to be at different starting points in their open finance road maps, with some at the head of the pack and others trailing far behind.

A key reason for this is the regulatory uncertainty, since the CFPB has an interim 1033 rule in the works. The bureau has received pushback from industry stakeholders and consumers alike on everything from the ability to charge fees to the notice-and-comment period required for major rulemaking.

When asked how their institution's adoption and use of open finance compared to those they compete against, 13% of respondents said they were significantly ahead, 19% said they were slightly ahead, 38% said they're on pace, 19% slightly behind and 6% significantly behind.

When bankers compare themselves to the broader financial institution space, they're less confident. Eleven percent said their institutions were significantly ahead, 17% slightly ahead, 29% on pace, 28% slightly behind and 11% significantly behind.

Key takeaway: Most respondents are keeping pace with their competitors and the broader industry in open finance adoption.