What is Open Banking?
What is Open Banking?
Open Banking is a series of reforms which allow banks to share their data with authorised third parties. These reforms were brought about to increase innovation and competition in the financial services sector, with the aim of providing a better experience for consumers.
Open Banking enables you to give access to your bank account data via a website or app.
For example, you could connect to an app which might use your current account information to help you to track what you spend and help you to realise financial goals.
What is the purpose of Open Banking standard?
The Open Banking standard are the standards that banks and third parties should follow when using what are known as application programming interfaces (APIs).
How does Open Banking work?
Open Banking works when you make the decision to share your data. You will have to give each provider permission to access your data when (and if) you choose to sign up for a product.
Your bank will not share your data with a provider unless you have given this permission. You can change your mind and withdraw your consent at a later date.
What is API in Open Banking?
An API is an application programming interface. It is a set of tools and protocols for building software applications. APIs allow software from one company to access the software from another.
Without APIs you would have to give your login details to a company if you wish to share your data with them.
Pros and cons of online banking
Open Banking rules only apply to bank accounts which you can access on the internet.
Online banking has its positives and negatives:
Who can I share my financial data with?
Only sharing your data with authorised third parties means that you will be protected if something goes wrong.
Authorised providers are regulated by the Financial Conduct Authority (FCA) and other European equivalents.
A list of regulated providers is available on the Open Banking website.
How will third parties access my data?
Third parties will only have access to your financial information if you give them permission to be able to see it. In other words, you will have to consent to a provider accessing your data.
After you have given consent, the provider will get in touch with your bank. Your bank will then process their request and share your details with the company.
Is my personal data secured with Open Banking?
There are strict rules which providers must adhere to in order to use Open Banking. The security systems and software have been rigorously tested.
Data protection laws apply to how your data is treated. If you use a regulated provider and fraudulent payments are made, your bank should give you back the money.
Can I opt out of Open Banking?
Open Banking is something that you opt into by consenting to a third party provider accessing your financial information. If you do not want to take part in Opening Banking, you are under no obligation to do so.
If you sign up for a third-party app and change your mind, you can revoke permission for a provider to see your data, at any time.
Open Banking was brought about to drive innovation in the financial services sector. Hopefully, consumers will benefit from a wide range of apps and websites which will help with everything from budgeting to finding the best deals. You are in control of which third party providers (if any) have access to your financial information.