Open Banking - What is it and what does it mean for you?

New personal banking rules called “Open Banking”, launched on 13th January, which could shake up the way we all bank and manage our money. It makes significant changes to how we can all control and use our own personal financial data. At first glance it may seem like an unimportant change, but there’s a little more to it than first meets the eye. Here’s what you need to know.

open banking

What's Open Banking?

Simply put, Open Banking puts you in control of your financial data and helps you share it with other people if you want to. Until now, your bank has controlled your data – but this will enable you to decide what you want to do with it. It’s as simple as that, but it’s important you consider the effects of this change.

What does it mean for you?

The idea behind Open Banking is being able to share your data will ultimately help you save money, or make more of the money you’ve got. There are a few ways this could happen:

1 - Making it easier to compare and find cheaper products. Say you want to save money on gas and electricity. Instead of telling the price comparison site what you spend on them now, you would click to allow them to check your actual spend directly from your bank account.

2 - Bringing all your money together in one place. Perhaps you’ve got a number of different accounts all with different banks, each with its own online service. Open Banking will allow the development of new apps and services that allow you to see all of those accounts in one place and move money between them directly in the app.

3 - New products and services – Open Banking is expected to lead to the development of new apps and services we don’t know we need yet! For example, new ways of making payments from your bank account using your mobile phone that aren’t provided by your bank, but are linked directly to it.

In future, Open Banking might even make it quicker and easier to complete your Annual Review with Gregory Pennington. Instead of spending ages on the phone to us, you might be able to allow us access to your bank transactions online, which would enable us to fill in most of your income and outgoings automatically. It’s certainly something we’re looking at.

Which banks are involved?

All the major banks will have to offer Open Banking. Right now, nine major banks are live. These are: Barclays, Lloyds, Santander, Danske, HSBC, RBS, Bank of Ireland and AIBG. Six more will be on the way shortly.

Always put your security first

It might sound obvious, but it pays to be very careful who you give access to your bank account! Open Banking is likely to lead to a boom in the number of companies and products that offer to help you switch, manage, or save money. So how do you know which ones to use and which to avoid?

The good news is any providers that want to take advantage of Open Banking must be regulated by the FCA. They should make it clear on their website or in their literature. If you’re unsure, you can always check the list of regulated firms on the FCA register here. If they aren’t registered, then stay well away!

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