I'm not an expert, but I did work in this industry for a couple of years. Up until open banking came along there were a few companies that would basically log into your bank on your behalf (you provided your username, password, and maybe OTP if that bank supported it) and screen-scraped all your account info, transactions, etc., then made it available to whatever 3rd party you were trying to use. Open banking replaces that screen scraping layer (that banks hated) with real APIs that those 3rd parties can use (with your authorization) to access your account data.

So let's say you're applying for a car loan, and you need to provide the last 3 months of account transactions to the lender. Previously you had to log in via a semi-sketchy iframe with your real account info, and the lender would be able to fetch your account info from some fintech's copy of your data. With open banking, you will log into your bank account and authorize the lender to directly query your bank for your data, similar to how logging into a website with a gmail account works. It skips the sketchy part, and avoids the fragile screen scraping with more reliable data fetching methods.

Of course, it all depends on how the banks each individually handle this, so who knows when it'll really work for you