Open banking launches this week, on the 13th of January 2018 but what is it and what impact will it have on banking and consumers going forward? We will answer that today.
Consumer Launch Date for Open Banking: 13th January 2018
Open banking is a fundamental shift towards a more transparent and accessable banking system, with this change in UK law allowing the major banks to share information with other financial services providers.
Bundled in with this legislation are clauses banning surcharges for payments made by debit cards, credit cards and online payment services such as PayPal and Stripe.
In short, other companies can now use the data the bank holds on its customers, so long as they are accredited, have a specific purpose, and have time constraints on how long the data can be held.
Money Hub Interview – Samantha Seaton
“Money hub is about putting your finances in one place and giving insight into what is happening. Greater control, greater clarity and putting you at the heart of your finances.”
Until tomorrow, it has been possible but cumbersome for a financial institution to get hold of all the financial data held about you by your bank, the technology and systems are outdated. It is widely considered suboptimal.
Seaton continued, “Open banking takes us into the new, safe and slick way of sharing your data.
The CMA, Competition Markets Authority is very much behind promoting these sorts of disruptors in the financial services market.
Take a mortgage for example, it can help by showing how you spend your money, how good you can manage money.
Right now, your rent is often not taken into account when you apply for a mortgage but it can be now, with open banking, and so the products and services you as a consumer are being offered and your current eligibility can suddenly open up a new level of products or services, allowing you to get to the property market quicker.
You may also have monitoring with open banking, and as soon as you reach certain thresholds new products and services may become available, which is not something you are necessarily going to keep an eye on yourself, those products that are now within reach can be literally one click away”
Is there a security issue here?
Well the good thing about open banking is that it allows you to give your bank authority to pass the data through to a third party that you want to use, to help you or provide a product/service, so that data must be regulated with the FCA, so if its not authorised they will not give access and it will stop there. But if they do give access, then the level of security and the distribution of your data so that it is completely separated and anonymised is at the top of banking level security. So it is perhaps a good way to approach what we are doing in this day and age.