Volume 6 • Issue 2 • PP: 26–35 • 2026
Open Banking Infrastructure and Banking-as-a-Service Adoption: A Multi-Level Competitive Dynamics Framework with Panel Evidence
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© 2026 The Author(s). Published by ASPG. This article is licensed under the Creative Commons Attribution 4.0 International License (CC BY 4.0).
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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.
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