Open Banking is a new and secure way for businesses to take control of their financial data and share it with organisations other than their bank. Open Banking will also provide new ways of moving money between accounts and making payments.

It encourages innovation and competition in financial services through enabling developers to harness technology which ultimately will help consumers compare financial products and, in time, search, select and switch to products which are more appropriate to their financial circumstances.

Through Open Banking you will be able to give permission to your bank to share details of your banking transactions with other organisations. The data will be shared securely and you will control which details are shared. You will be able to cancel your permission at any time, meaning the other organisation would no longer be able to see your data. The introduction of Open Banking means that financial institutions, like your bank, will have to share your information (with your permission) with third parties to enhance the types of financial services and products available to you.

The sort of services delivered through Open Banking could include:

  • A business current account comparison site, that looks at the way you use your business current account and how much it costs to recommend the best account for you;
  • A money management app that gives you tips and advice based on your business current account usage;
  • A secure website where you can see all your financial information in one place to give you a clear picture of your financial position, even if you hold products with different providers. You could make transfers between them and make payments all from this one site. This could be integrated with your accounting software package;
  • Speeding up a loan or a financing application because you give the lender permission to see your banking information directly;
  • Making it quicker and easier to setup and make payments to suppliers, directly from your bank account (instead of having to use a credit card / debit card);
  • A global view of your financial situation – information will be pulled from your different bank accounts and presented in one place;
  • Finding the right financial products for you – it will allow third parties (e.g. a price comparison website) to pull your spending patterns / habits from your bank, analyse them, and recommend products based on this i.e. a cheaper overdraft, a better credit card

Here are some commonly asked questions:

How do I control who has access to my data?

Third parties will only be able to access your data or initiate payments from your account if they have your explicit consent to do so.

How do I control the type of data I share with a third party provider?

A third party will only request the data it needs to provide their service and they will describe exactly what that data is, how long they need it for and what they will do with it. The customer can make an informed decision on whether they want to share their data or not.

How do I know I can trust a third party provider?

Third parties will have to be registered with, and regulated by, the FCA or competent authorities of other EU countries before they can offer any service through Open Banking. Details of registered parties will be available on the FCA website.

How can I be sure that a third party is secure?

Each third party will have to meet certain criteria to become registered with the FCA. They will also have to comply with the security standards that underpin Open Banking.

How will my bank/building society know that I have given consent to a third party?

When you give consent to a third party you will go through a step where your bank/building verifies your identity. This is likely to be similar to how you access your internet or mobile banking services at the moment.

How can I opt-out of Open Banking Services that I previously signed-up for?

You can opt-out of Open Banking services through the website or mobile app of either the third party or your bank/building society. Either way will mean that the third party will no longer be able to access your data or initiate payments.

Will I be charged to use Open Banking services?

Any charges related to Open Banking services will be driven by market competition and the commercial models of the third parties.

Is Open Banking safe?

We have all been taught to never share our account details. That’s still good advice in many ways, but the difference with Open Banking is that we are creating software and security systems that let you share access securely.

What sort of services will be available through Open Banking from January 2018?

From Jan 2018 through Open Banking you will be able to share data from your business current accounts with third parties. Also, you will be able to make single “one-off” payments from your business current accounts. This could be a payment to another of your accounts at a different bank/building society, a direct payment to a supplier or a payment to an online merchant. At this time Open Banking services will be available for accounts that require just one person in your business to authorise activity such as payments. The ability to use accounts where two or more people are required to complete a transaction will be delivered at a later stage.

Nesta Open Up Challenge:

We have been working closely with Nesta, the innovation foundation, on their Open Up Challenge. This challenge has given 20 talented fintech teams a unique opportunity to develop next-generation services, apps and tools that will create game-changing value for UK small businesses through Open Banking. Winners of the challenge will receive significant funding to help them launch their propositions for in 2018. This type of activity will raise the level of awareness in the fintech community, encourage participation and lead to a wide range of innovative services for small businesses. Find out more here.

How can I find out more?

You can find out more about Open Banking from the regulator and Which? using the links below.    

Financial Conduct Authority (FCA)