Are you open to banking in a new way?

By Jenn Taft
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We’ve got the details to help make understanding Open Banking easier for you

UK banking is going through a big shakeup that could make it easier for you to control your money. What changes are involved and what does it mean for you?

What is Open Banking?

Open Banking is a new initiative by the Competition and Markets Authority (CMA) to regulate the financial market. Far too often the big banks hold most of the market and make it difficult for smaller banks to make an inroad. This means you could be getting some great deals for your money but not be aware that those deals are there for the taking.

Up until now it has sometimes been a bit of a struggle to get information regarding our transaction history from your bank. Open banking aims to change this so you will own your data, rather than the banks holding on to it. You are then free to share it with whoever you wish, meaning the smaller banks can get a foot in the door where they are most needed.

So, what exactly is so great about Open Banking?

It’ll give you flexibility

Each time I have moved to a new house I have done so with the help of a financial advisor. She has been able to take all our financial information, work out what we can afford and then find the best mortgages available for us. Each time she has found us a mortgage that we would never have found on our own.

Open banking is a little like this. By giving permission for banks, companies, apps and providers to access your information you will be open to a lot of products and services that could better suit your money.

You’ll also have the freedom to move your money between accounts far more easily if you use apps designed to bring them all together in one place. There won’t be the need to constantly sign in to each account with each set of security questions, allowing you to see and move your money with ease. Think of the time you could save.

More for you

There could be many products and services available through Open Banking:

- Tailored current account facilities

- Insurance quotations

- Payments to online shopping with greater security

- Greater benefits for savings accounts

- Budgeting and money management facilities to help you look after your money

These services are already available throughout the internet, but Open Banking could help to bring them all into one place. Why is this good?

- By using specific technologies, companies will be able to quickly assess your situation, what you can afford and what the best route for you is for each situation.

- This will provide you with a personalised service, with greater flexibility and benefits than what may currently be on offer.

- Such quick analysis makes the competition between banks far better, which will, in turn, mean better deals for you. Banks will have to be more competitive to gain the customers in a more crowded market.

Is there anything to worry about?

Trusting others

There is a huge risk involved with banks’ moving to largely digital premises.  Fraud, data loss and identity theft are just a handful of problems we could face if there were to be any glitches in a banks day to day digital running.

Banks have always been expected to look after our information and details, and that won’t change with the introduction of Open Banking. Banks have been tasked to be at a certain level of security before moving to Open Banking so this does give peace of mind that we will move forward securely. If you are happy with the way your data is currently looked after by your bank then you shouldn’t be worried.

What is going on with your money?

There is an element of freefall with Open banking. You give permission to others and your money could be looking after itself without you really having to be involved. If you are used to logging on to internet banking and managing your money, or if you still get a paper statement, then such a change could be quite daunting.

It’ll be important to keep a close eye on the permissions you give to brands and apps. They will be accessing and assessing your finances so it’ll be important that you know exactly what is going on with your money.

Is it right for you?

Do you have to move to Open Banking? No, but do consider that you’ll miss out on the best for your money if you keep your data tucked well away with the big banks. It’s worth doing your research quickly as the big banks are supposed to already be on board.

Have a look at what Open Banking could do for you and if needs be you can keep a tight rein on what permissions you give for your data to be used. Open Banking will find its feet, and then you can really start to look closely into what good is out there for your money.

Top Tips

Open banking is a big change to how we manage our money, and there are some key points to remember:

- Open Banking has been introduced to really make your money work better for you.

- You are in charge of your financial data such as your transaction history, spending habits, and saving goals. You can share this information with banks, brands, providers and apps to get the best deals for you.

- Only you can give permission for banks to access and share your financial data and personal details.

- Over the next few years there is likely to be a lot of new banking technology made available, which will mean better deals for your money.

 

Author bio: Jenn is a freelance writer and physics teacher from the West Midlands. She has a love of writing about personal finances, especially how they change when you become a parent, and enjoys the honesty that such writing brings. When not writing, teaching or being a mum, Jenn loves nothing more than indulging her love of hospital and police based documentaries, and cake.

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