Are banks welcoming open finance with open arms?

American Banker's 2026 State of Open Finance Adoption Report

This item is the first in a series diving into new data from American Banker, so check back for the latest updates.

• Part two: Coming soon

How important is open finance to bankers?

The future of open finance is still being written, as regulations change and lawmakers become more knowledgeable about the technology. But regional bankers seem to be the most eager to wade in.

The majority of regional bankers (68%) have identified open finance as a high or critical priority to their institution's business plans, followed by 28% who said it was a moderate priority, 2% who said it was a low priority and another 2% that said open finance wasn't a priority at all.

Newer, more technologically advanced nonbank entities continue wrestling market share away from traditional financial institutions, making open finance a new frontier for bankers to compete for customers.

The Rhode Island-based Citizens Bank, for example, officially launched its Open Banking API project last year to allow customers to link their accounts with other third parties in a more secure manner, capitalizing on nearly two years of testing since its 2023 development and beta phase in mid-2024.

More recently, in August, Citizens added a functionality into its mobile banking platform allowing customers to update saved payment information across billers, subscriptions, online retailers and payroll companies. 

"From Citizens' point of view, it makes it easier to switch to Citizens by streamlining the shifting of new account holder payment connections away from other banks," Aaron Press, research director of Worldwide Payment Strategies at IDC, told American Banker. "Of course, Citizens will still need to offer accounts and products that attract new customers separate from this capability, but it does reduce some barriers to switching."

Respondents from global and national banks felt fairly similar to those from credit unions, with 55% of bankers putting open finance as a high to critical priority in their institution's goals and 49% of credit union executives doing the same. These institutions were among the first to adopt open banking and data sharing programs.

Community bankers were the most evenly distributed, with 16% putting open finance as a critical priority, 19% calling it a high but not critical priority, 37% calling it a moderate priority, 19% calling it a low priority and 10% who said open finance isn't a priority at all.

Key takeaway: Most financial institutions consider open banking a priority, but regional bankers are the most eager early adopters.

The forces driving open-banking adoption

Most financial institutions are pursuing an open finance architecture to remain competitive against peers or to strengthen relationships with customers, according to the survey.

Improving the customer experience and level of personalization was the top reason for pursuing open finance for 65% of community bankers, with remaining competitive against other open finance-minded competitors a close second, with 62% of respondents. 

Regional bankers were most driven by the mindset of increasing customer engagement and retention, as reported by 67% of respondents in this category. Improving the customer experience was second with 55%.

Increasing customer engagement and retention was also the top driver for 65% of national bankers, followed by 57% who said improvements to customer experience was the top reason for pursuing the technology.

For consumers, the most obvious benefit of open banking, or financial data sharing, is that they can use any financial app or service they want and have their bank account data easily ported to that app or service. Another benefit is that the process of moving accounts from one institution to another is much easier than before, which makes deposits less sticky for banks with antiquated onboarding procedures. But some executives believe that adopting open finance protocols can keep customers where they are if they remain happy.

This niche has become a race for banks to retain and possibly attract new customers, with some experts believing that data sharing could yield a competitive advantage.

"Institutions will adopt [open banking] faster because of competitive pressure," Paul Schaus, founder and CEO of CCG Catalyst, a Phoenix-based financial services consulting and research advisory firm, told American Banker. "You can't have a $3 billion bank saying, 'Oh, I don't have to put it in until 'x' year when a $200 billion bank rolled it out today.' … The competitiveness of this is going to force the $3 billion bank to do it right away."

Key takeaway: Customer engagement and personalization, as well as maintaining a competitive edge, are driving factors behind adoption.

Who are the data providers, and who are the users?

The concept of open finance puts banks and credit unions in the role of data sharer and data user. Some are predicting that their organizations could lean more towards one extreme, while others say their institutions will occupy both roles.

More than half of regional bankers (51%) say their institutions will act primarily as data providers in open finance. Twenty percent said their banks will act as data users, 27% said both provider and user and 2% were unsure what their organization's focus would be.

Credit unions were the next group most prone to play the role of data provider, with 24% of respondents in agreement. Twenty percent said their institutions would primarily act as data users, 32% identified as both provider and user and 24% were unsure.

National and community banks saw equal shares (20%) of respondents saying their organizations would be data providers.

Many banks share their customer data with other institutions or third party firms, either willingly as part of an open finance initiative or not. Institutions leaning towards a data provider role, compared to those that see themselves as data users, seem to not push as heavily into programs such as account switching or embedded banking.

Some bankers are working with third parties to explore how open banking can work for their institutions.

Last year, the Alabama-based Regions Bank announced its partnership with data-integration provider Axway to build an open banking framework that can support future product launches for consumers.

"Open banking for Regions, as well as for the industry, is really revolutionary," Tim Mills, emerging and digital payments group manager for Regions, told American Banker. "I think it's also a way to expedite the development of new products and services that add value to the relationship that our customers have with Regions, and more broadly the relationship that customers have with financial service players across the board."

Key takeaway: Regional bankers see themselves more as data providers than data users, while other institutions see themselves on both sides of the equation.

Where can open finance make its mark within financial institutions?

Just as the degree of interest in open finance varies from one institution to another, so do the main reasons for wanting to adopt such initiatives.

Community bankers who identified as data users said that open finance's applications for account aggregation and personal finance management (67%) was the biggest driver of internal interest or investment. Account verification and funding for account opening followed at 56%.

Among regional banks, 43% of respondents chose account aggregation, account verification and account-to-account payment, while 35% cited identity verification, alternative lending models and e-commerce.

National bankers were most interested in how open finance could improve account-to-account payments (46%), followed by account aggregation (40%), embedded finance (34%), account verification (31%) and alternative lending models (also 31%).

For credit unions, the breakdown was account verification (54%), account aggregation (46%), account-to-account payment (46%), embedded finance (46%), alternative lending models (38%), identity verification (23%) and pay-by-bank commerce (8%).

Direct deposit switching, while not a new concept, has become a crucial function of open finance, with many financial institutions working either internally or with third parties to streamline the account switching process. Open finance-related tools can reduce friction points during this part of the consumer lifecycle by allowing institutions to more securely receive data supporting customers' financial history.

In alternative lending, open banking lets lenders ingest potential borrowers' account data to analyze cash flow to help with underwriting decisions. Experian's newest single-score model, named Experian Credit + Cashflow, incorporates traditional credit, alternative credit, trended data and cashflow data from consumers to provide a more broad view of a consumer's financial picture to underwriters.

"Our goal is to enable our clients to choose the scoring approach that best fits their strategies," Scott Brown, group president of financial and marketing services for Experian North America, told American Banker. FICO leaned on its partnership with Plaid to upgrade its UltraFICO score with real-time cashflow data from consumers, thus giving lenders a more up-to-date picture of a potential borrower's creditworthiness.

"Before the Plaid deal, the UltraFICO score accessed checking and savings account data, such as account age and balances, to augment traditional credit‑file data," Ron Shevlin, chief research officer for Cornerstone Advisors, told American Banker. "With Plaid, the UltraFICO score will use real‑time or near‑real‑time cash‑flow data, such as inflow, outflow and account activity, to enhance the score."

Key takeaway: Account aggregation and account verification are popular drivers of open finance adoption.

The challenges to open finance

The concept of open finance can leave financial institutions prone to risks such as data-privacy gaps, incompatibility between technological systems and more. Any one of these issues could hinder adoption.

Community bankers saw security and data privacy concerns as the top risk facing their institutions (56%), followed by regulatory uncertainty (47%), data liability during instances of breaches or fraud (33%) and legacy systems (also 33%).

Cybersecurity has remained a top challenge for banks to tackle over the last few years, and the growth of artificial intelligence has further complicated this challenge with breaches becoming harder to detect and defend against. But many are using AI themselves to strengthen cyber defenses.

Regional bankers also held security and data privacy concerns as the top risk (40%), while data liability (34%), legacy technology (34%), regulatory uncertainty (28%) and reputational damage (28%) were also significant challenges.

National bankers were most worried about regulatory uncertainty (54%) with data liability (42%), security concerns (42%) and legacy technology (33%) close behind. 

Security and data-privacy concerns were the top worry for more than half of credit-union leaders (59%). Data liability (41%), legacy technology (38%) and loss of control over customer relationships and data (31%) were also major challenges.

The regulatory environment surrounding open banking was quite uncertain in 2025, as the defanging of the Consumer Financial Protection Bureau saw the bureau's 1033 rule on open banking get shelved.

The CFPB said in December that it was slated to issue a new interim final rule on open banking before the end of the year, but missed that deadline.

Key takeaway: Data privacy concerns and regulatory uncertainty hinder the speed of open-finance adoption among banks and credit unions.