Let’s Learn About Open Banking?
Open Banking is generating a lot of discussions right now (and rightly so!), this is an area of finance that will completely change how we manage our money. But what exactly is ‘Open Banking’ and what does it mean for your money?
The History Behind Open Banking
Firstly, let’s clarify… Open Banking is where financial information is shared electronically through APIs. These APIs allow third-party developers to build applications around this financial information. A good example of this would be a Fintech budgeting app. The app would be able to pull data from your bank accounts and help you analyse your financial transactions to determine where you can make better financial decisions.
Open Banking is still relatively new. Since 13th January 2018, you can allow third-party providers such as budgeting apps to access your UK or European bank account data. If you wish to use open banking and share your account data, then your bank is obligated to share this information with the organisations that you choose.
How Will It Help Consumers?
Open banking provides a better experience for consumers. If you’re happy to share your data with third parties, then you can expect to benefit. Not only will it allow you to get a complete overview of your financial situation, but it can even help you save better.
Financial planning has typically only been available for wealthier individuals, but now thanks to open banking, it can help everyone learn about their financial situation and how to improve it.
Whether you wish to make use of open banking is entirely up to you, and remember, no one is forcing you to share your data if you don’t want to. However, the more options you have to take control of your finances, the better.
Is Open Banking Safe?
You may be thinking that open banking could be open to hackers and fraudsters, but don’t worry, your information is entirely safe and secure as long as you’re giving it to authorised providers. All authorised providers also have to comply with data protection rules, so you will know exactly how your data is being managed.
It’s important to note that authorised providers are highly regulated and have to be FCA (Financial Conduct Authority) approved, in order to have permitted access to your financial information.
Open Banking Is the Future
Open Banking looks set to revolutionise how we manage our money. A considerable amount of effort has been made to make sure any potential risks are eliminated and that it is safe for consumers to use.
Overall, any services that help deliver greater transparency and improve financial inclusion can only provide a positive outcome for consumers.
But at the end of the day, it’s entirely up to you to decide whether you’re happy sharing your data with third parties. If you are, then it could be an excellent way for you to gain insights on how you can better manage your money, and potentially find access to products you may not have had before.