Even though modern technology has granted access to your bank balance 24 hours a day, you are still limited by the interface your bank has chosen to present personal and business accounts. However, the introduction of Open Banking has meant that you now have a way of centralising your finances and improving the way you interact with money.
Whether it’s sharing personal data to gain access to better credit products, or simply having an unrestricted view of all of your finances at once, there are many benefits to open banking for both individuals and businesses to take advantage of.
If you would like to understand what open banking means for you, we’ve put together a guide to help you understand how open banking works, and whether you’re eligible to try it out for yourself. Read on to discover more about open banking, including whether it is safe for you to share personal data.
What is open banking?
- Giving people more choice and more control over their money and their data
- Sharing information between banks and building societies in one centralised place
- Faster payment methods and innovative banking products
- A way to improve competition in retail banking and financial services
Open Banking is the sharing of data between banks and building societies, that allows you to centralise your finances in one place. It also gives you greater control over your data, and the ability to share data to get more personalised quotes when borrowing money through credit cards or personal loans.
For example, if you had a current account with one bank, a personal loan with someone else and a credit card with someone else, you would currently have to access each different provider’s app or online portal in order to see the details of each product. With open banking you would simply have to access one provider and see all of your different products in one place.
How does it work?
- Puts all of your bank accounts and credit products in one place, even if they are all with different providers
- Standardised APIs that can communicate between banks and building societies – banks can talk to each other much more easily and you aren’t restricted to just using one interface
- Sharing of information that can lead to more personalised credit products such as loans or credit cards – products to match spending habits
Depending on which provider you currently bank with, you should already be used to their online interface so you can navigate online banking to check your balance, make payments and set up standing orders.
However, if you have multiple accounts with different providers, you will still have to log out of one interface and log back in to another. Open banking allows you to import all of your accounts into just one interface (or API), so that once you log in, you can see everything.
This is due to the use of standardised APIs that allow banks to share information easily, as long as you give permission for them to do so. In the long run, this sharing of personal data could also help you get a better deal on future credit products you decide to apply for.
Benefits of open banking
- Centralised view of all of your accounts in one place
- Personal finance and debt management tools
- Business-related tools such as cash flow management or ways of getting access to better credit products such as loans, credit cards or overdrafts
The overall benefit of open banking is that you will have better control over your data and your finances at the same time. This can result in your ability to get a more personalised credit product, along with access to tools that will assist you in managing your personal finance and even your debt.
By sharing your personal banking data, you will allow providers to look at your account history and get a better idea of whether you would be creditworthy or not. This will, in turn, help you to manage your money and recognise trends in your own spending.
For business owners in particular, open banking means that you can utilise tools that will help you with cash flow, by analysing your shared data and picking up on trends in your previous spending. This can give you a holistic view of your money as a business, taking into account individual monthly expenses and relating them to your overall profits and if you’re making your business a success.
Which providers are currently utilising open banking?
Many providers are now starting to realise the benefits of open banking, so have already committed to it, though some are less inclined. Have a look at the list of our providers who currently utilise open banking:
- Bank of Scotland
- Clydesdale Bank
- Lloyds Bank
- Metro Bank
- Sainsbury’s Bank
- Starling Bank
- Tesco Bank
- The Co-operative Bank
- The Royal Bank of Scotland
- TSB Bank
- Vanquis Bank
- Virgin Money
Is open banking safe?
Like many other security features of your bank account, open banking is also very secure and will keep your date safe. The sharing of data is not mandatory and you are given much more control over who has access to it and what it is being used for. This means you can change your preferences at any time if you feel like sharing your data is not beneficial for you.
Since GDPR regulations were introduced in 2018, there has been a much higher scrutiny of how banks are managing the data of their customers. Open banking could be viewed as a way to circumvent this but in actual fact it gives you greater control over your data, so that you have the final say over who is able to view it.
Can I use open banking?
If you’re unsure whether your current bank account provider has adopted open banking, you can check our list above or get in touch with them to confirm. You might find that even if they don’t offer it, they could be introducing it very soon, in line with many other banks or building societies.
Find out more about open banking here, or head over to our current account tables to find a bank who supports open banking using the link below.