Published on: 8 Jan 2018
Saturday 13 January 2018 sees the start of a new way of digitally managing your money. You’ve probably had notifications from your bank or credit card provider telling you that they’re making changes to your terms and conditions in preparation for ‘open banking’. If you’re happy banking online, then this may be for you. Read on and stay MoneyFit.
What is ‘open banking’?
Open banking is a new, secure way for customers to take control of their financial data and share it with organisations other than their banks. You’ll be able to compare what’s on offer from different organisations via a phone-based app.
What does it cover?
Open banking covers current accounts, flexible savings accounts, e-money account and credit cards – assuming you can manage all of these online or via a smartphone app.
What information will be shared?
The information shared includes financial data, including transaction history and spending behaviour.
Do I have to use it?
No - You’ll have to opt in to share your data. You must satisfy yourself about the privacy and security safeguards.
Once you’ve given your consent to an organisation, they will then be able to access your account details from your existing bank*.
You can authorise third-party access without have to reveal your login details to anyone other than your bank.
How safe is it?
Existing Data Protection rules and guidelines remain in place – see Gov.uk. A company will not have access to your personal information unless you give your consent.
If you notice any payments you didn’t authorise, you can make a claim from your bank, even if the payment has been initiated through a third-party provider.
What could open banking do for me?
There’s a lot of potential for people to start making better financial decisions and to benefit from being more engaged with their day-to-day finances. One of the major benefits is that users will be able to import information from multiple providers into a single place – for example accounting software or an excel spreadsheet.
If you're a military spouse or a veteran running your own business you may have come across this technology already. It has been a part of business banking for a few years under the ‘data services’ name, so if you've ever managed a business bank account, you may be familiar with how it works.
The sort of services delivered through Open Banking to personal customers could include:
- A current account comparison site that looks at the way you use your current account to recommend the best account for you;
- An app that monitors your balance and warns you if you’re going overdrawn;
- Speeding up a loan or mortgage application because you give the lender permission to see your banking information directly;
- Making it quicker and easier to set up and make payments to retailers directly from your hank account (instead of having to use a credit/debit card or Paypal).
For more examples and information see the Open Banking website and talk to your bank.
* Nine UK banks and building societies are involved – Barclays, Lloyds, Santander, Danske, HSBC, RBS, Bank of Ireland, Nationwide and AIBG. As at 19 December only four banks were ready – so check with your bank.
Sharing your online banking information (Money Advice Service)
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Choosing the right bank account
Fraud, scams and identity theft
Is my information being handled correctly? (Information Commissioner’s Office)