Open Banking

Contents

Overview

Open Banking is a financial technology term meaning a secure and regulated way of giving shared access to your financial information to certain banks and financial institutions.

The Open Banking Standard sets out how financial data should be created, shared and accessed. It works with online and mobile banking only.

Origins of Open Banking

It was set up by the Competition and Markets Authority on behalf of the UK Government to tidy up and regulate financial products and practices already in existence and to encourage competitive innovations. 


Open Banking can only be set up with your permission and authorisation and you have to be a mobile/online banking user. If you use a mobile banking app, you might see an advert asking you whether you want to sign up for Open Banking.


Take a look at the Open Banking website information, you can also download the Open Banking guide.

API Technology

The technology uses open API's or Application Programming Interfaces. An API is basically an interactive messenger that takes your request, it tells a system what you want to do and then returns the response back to you.

An example of API's in action is an online shopping order, you select what you want to buy and place in your shopping basket, you then 'check out' and are directed to a payment page. Once you have paid your order using your payment information, your order is shipped to the address details you completed online.

Other popular services that use API's

Who is it for?

There are 4 main groups who will benefit from Open Banking:


Pro's of Open Banking

There are a wide range of benefits and features available but please note that not all of them will be available with all Open Banking providers.

Cons of Open Banking

Some leading financial experts are concerned about the longer term effects of Open Banking which is in an early phase of development and roll out.



Check a firm is regulated

If you decide that any part of the Open Banking benefits are helpful to you, the next most important thing to do is to check that the firm is regulated. You can do this by:

1. Account information sharing services such as budgeting apps and price comparison sites that let you view accounts from multiple providers in one place. 

2. Payment initiation services that allow you to instruct payments to be made directly out of your bank account, as an alternative to using a third party such as a Visa debit card or PayPal.

Giving Open Banking Permission

When you sign up for an Open Banking service or app, you will be shown information that the provider needs your permission to see. You will be asked to give your explicit consent for the provider to access this information. You will be asked to renew your authorisation every 90 days.


Your account provider, such as your bank, double checks that the third party has your consent for you too. Before connecting any service to your account, your account provider will confirm that you want to share the information.

Important considerations

Removing Open Banking Permission

You can either visit your online banking provider to remove any permissions or remove your permission directly with the service provider. Most providers should provide a dashboard that makes revoking access clear and simple.

Under the General Data Protection Regulations (GDPR), you also have the right to: request a copy of the personal information a service provider holds about you, this is known as a 'Subject Access Request'. You can request that you personal data be erased, this is known as a 'Right to Erasure'.

Open Banking in Debt Advice

When a person seeks debt advice, much of the debt advice process (please also see 'Your Debt Advice Journey') relies on gathering facts and information about a person's financial circumstances before and during unmanageable debt, and then for longer-term future proofing. Below are some things to consider about Open Banking in the debt advice process:

Add to this content

We appreciate that Open Banking is in an early phase of implementation, this information has been written by a former NatWest retail banker of 10+ years and 25+ years as a specialist debt and insolvency adviser.

Money advice Hub is committed to keeping the public informed and would like to evolve the above Open Banking information parallel to the Open Banking phases and therefore encourages suggested factual additions. We will also consider adding Open Banking initiatives designed to help consumers.

If you would like to put a suggestion forward, please email:

Web Admin at Money Advice Hub


Many thanks

Money Advice Hub Media and Web Team