Open Banking: AISP and Automated Bank Reconciliation

AISP (Account Information Service Provider) and Bank Reconciliation are two key concepts in the context of open banking. The system introduced by the EU directive Payment Services Directive 2, in fact, requires banks to expose their APIs to authorized third parties. 

This means that a user’s banking data, subject to their explicit consent, can be accessed in real time and aggregated from multiple sources (e.g., current accounts held with different banks), creating value-added services that make it possible to manage accounts centrally and automate processes such as accounting reconciliation and creditworthiness assessment (affordability check).

PSD2: the open banking revolution 

The entry into force of EU Directive 2015/2366, also known as PSD2 (Payment Services Directive 2), has revolutionized digital payments in European Union countries. 

The regulation, approved in 2015 and fully applied from 2018, introduced so-called Open Banking, a system that—subject to the customer’s explicit consent—provides for the sharing of banking data with authorized third parties, such as FinTech companies and technology enablers (for example, platform or API infrastructure providers).

This opening of the banking system—which requires banks to expose their APIs—has led to the creation of new services, ranging from data aggregation from multiple banking institutions to expense analysis.

Open banking therefore makes it possible to transform raw banking data into structured financial information that can be used to gain an overall view of one’s bank accounts and automate previously time-consuming processes such as spending analysis and bank reconciliation.

What is an AISP (Account Information Service Provider)?

In the context of open banking, a central role is played by the AISP, or Account Information Service Provider, the authorized entity responsible for aggregating data from multiple payment accounts and structuring the information so that it can be used by the user or by other applications.

Also known as a TPP (Third Party Provider), the AISP leverages APIs that banks are required to make available to third parties, as provided for by PSD2. Naturally, an AISP may operate only with the user’s explicit consent and in read-only mode. 

Thanks to banking APIs, therefore, the AISP makes it possible to aggregate and structure data from the user’s various payment accounts, transforming it into useful information for expense analysis, budget management, and the automation of accounting reconciliation.

How does an AISP work?

The operation of an AISP is defined in detail by the PSD2 directive and consists of three fundamental steps:

• User consent: first, the bank requests the user’s consent, who must be authenticated via Strong Customer Authentication (SCA), clearly showing which data will be exposed and for how long. In any case, consent has a maximum validity of 90 days, after which it must be renewed);
• API access: the AISP sends an API request to the bank, which—once authorization is granted—issues an access token that allows data access for a certain period of time. The AISP can then query the exposed APIs and receive current account data in structured format (JSON or XML);
• Data processing: if the user holds accounts with different banks, the AISP repeats the authorization process for all institutions and brings the data together into a single dashboard. At that point, the data can be analyzed, categorized, and enriched—for example, by classifying recurring expenses through machine learning algorithms or associating transactions with a specific geographic location. The processed data can be viewed by the user through a dedicated AISP interface (app or platform).

The most useful and widespread AISP applications relate to expense monitoring and expense management, as well as those that enable the full automation of complex processes such as bank reconciliation and risk assessment.

Bank reconciliation: what is it?

Bank reconciliation is a fundamental accounting practice for companies and professionals that consists of verifying the consistency between bank data and the records contained in accounting books.

This activity is used to identify and correct any discrepancies, such as transactions not recorded in the accounts or typing errors. Although not strictly mandatory, accounting reconciliation is essential to meet tax compliance requirements: it makes it possible to prepare accurate and truthful financial statements and to demonstrate the origin of financial flows in the event of inspections or audits by authorities.

Before the introduction of open banking, reconciliation was a manual and highly time-consuming activity. Today, however, thanks to services that leverage banking APIs to aggregate and structure data from all current accounts held by a single entity, it is possible to automate this process and manage banking data in real time.

How automated bank reconciliation works

The open banking APIs provided by AISPs make it possible to integrate banking data into enterprise management and accounting software. First of all, the software securely connects to the bank via the authorized AISP and downloads banking data in real time (in a standard structured format).

The data obtained is then processed by a matching engine (often based on machine learning) that attempts to match bank transactions with accounting records by cross-checking parameters such as exact amount, date, and payment description.

Transactions with a certain match are automatically confirmed by the system, updating the accounts without human intervention, while those that remain unmatched are flagged and sent for manual review.

AISP and bank reconciliation: what are the differences?

Without the information made available by the AISP, as we have seen, automated bank reconciliation would not be possible. This does not mean, however, that the two functions overlap.

While the AISP has the fundamental role of providing structured banking data in real time, reconciliation is the accounting process that can leverage this data through advanced services that make it possible to automate comparison, verification, and planning activities.

The data provided by the AISP therefore represents the foundation for innovative services that enable automated and centralized management of financial operations and their real-time supervision. Using a more intuitive metaphor, we can say that the data provided by the AISP is the means, while the automation of accounting processes is the goal of specialized tools built on that data.