Open Banking Infrastructure and Banking-as-a-Service

Adoption: A Multi-Level Competitive Dynamics Framework with

Panel Evidence

Serkan Yilmaz Kandir1,* Murat Ismet Haseki2

1 Faculty of Economics and Administrative Sciences, Adana, Turkey

2 Faculty of Economics and Administrative Sciences, Cukurova University, Adana, Turkey

Received: January 17, 2026 Revised: March 05, 2026 Accepted: May 17, 2026 ⋆ Corresponding author

ABSTRACT

Open banking standards call for banks to publish standardised Application Programming Interfaces (APIs) that give

authorised third parties access to account and transaction data, with the consumer’s permission, that was once only

available within the bank’s own systems. The real-world outcome is a transformation of the financial intermediation

chain – banks are infrastructure providers, FinTech firms are service assemblers, and non-financial brands are

including banking services directly within their own platform via Banking-as-a-Service architectures. This paper

introduces the Open Banking Competitive Dynamics Framework (OBCDF), a multi-layered analytical framework

that considers data, platform, competitor, and outcome layers, and tests the competitive impact of open banking API

adoption on bank performance using a staggered difference-in-differences design with a panel of 45 banks over

10 quarters. API adoption is found to increase connections with third-party providers by 7.2 per quarter and the

share of non-interest income by 0.62 percentage points, but also result in a statistically significant, although small,

decline in the share of the deposit market. The TPP connections gained from early adoption are also found to be

different by bank size, with larger banks seeing the largest absolute increase in TPP connections, and smaller banks

seeing the largest absolute increase in non-interest income. Pre-treatment parallel trends tests are used to validate the

identification assumption. The results have implications for incumbent bank strategy, the incentives for FinTech

players and the design of open banking regulatory frameworks in jurisdictions currently developing mandates that

are outside of the PSD2’s scope.

Keywords: Open banking Banking-as-a-Service API economy PSD2 Competitive dynamics Financial

innovation Third-party providers Embedded finance FinTech Staggered difference-in-differences

1. INTRODUCTION

The competitive logic of financial intermediation is always

and everywhere information. asymmetry. The banks’ primary

source of consumer financial information was information to

run their accounts in which that data was accumulating, and

they used that information to run their accounts in which that

information was accumulating. informational advantage for

cross-selling credit, insurance and investment. products at

margins new entrants could not duplicate. Open banking mandates

aims to eliminate this benefit by law. Margaret, who is

under the European Union’s protection. The UK open banking

Standard (Revised Payment Services Directive (PSD2)),

and analogous frameworks in Australia, Brazil, Singapore

and more than 40 other countries. jurisdictions, banks need