News & Blog

Open Banking – A Revolution?

27th March 2018

13 January 2018 saw the introduction of Open Banking. The following information explains:

1) Why it has been introduced?

2) Who can participate?

3) How do you get started?

4) What are the benefits?

5) Who will provide the service?

6) How are you protected?

7) Long term plans

1) Why has it been introduced?
In 2016 the UK Competition and Markets Authority (CMA) produced a report on the retail banking sector.
Two of their key findings were:

  • Large banking institutions did not have to try hard to retain customers.
  • Smaller entrants to the banking sector found it difficult to bring new, innovative products into the market place and compete.

These findings concluded that customers should be able to shop around for the best bank account deals by securely sharing their details with a regulated third party.  These third parties would then be able to produce competitive solutions that can easily be transacted from bank to bank.

2) Who can participate?
Currently, anyone who has a valid current account and have already registered for online or mobile banking can participate.
Businesses who operate a business current account and bank online can also participate.

3) How do you get started?
Step 1 – Give consent for a third-party provider to share your data. This consent could be for:

  • Access to personal or business accounts
  • Authorisation of payment requests

Step 2 – Visit your existing bank/building society’s online login page* where you can request that your account information can be shared with your chosen third party, or request that payments can be facilitated by the same.

Step 3 – Once authorised your third-party provider can only use your details for specific facilities agreed by you.
*Most providers are still working on the online functionality for Open Banking, so this may not yet be available online.

4) What are the benefits?
Ultimately, Open Banking was designed to increase market competition.  To do this, the aim is to make it easier for consumers to access products and services from alternative providers and to obtain more accurate personalised quotes from price comparison sites.

  • Increased choice
  • Easier access to competitor products
  • Personalised quotes
  • Information sharing

Specifically, for personal customers:

  • Personal Finance Management
  • Single view of multiple accounts
  • Debt management

Specifically, for businesses:

  • Cash flow management
  • Lending comparison tools
  • Savings rate comparison tools

5) Who will provide the service?
There are already many third-party providers who conduct work on behalf of individuals and businesses. One of the most well-known is PayPal which is predominantly a third-party payment facility.  These types of companies will evolve further as Open Banking gathers traction.

6) How are you or your business protected?
Safeguards include the following:

  • You will sign up for Open Banking via your own bank’s login page.
  • Successful login can then authorise your bank to share information.
  • Every entity involved in Open Banking must be regulated and comply to Data Protection laws.
  • You can check each entities validity by visiting the Financial Conduct Authority website.
  • Third parties that are not listed as regulated should not be used.
  • In all cases a client must give authorisation to participate in Open Banking. There is no automatic entry.

7) Long Term Plans
Ultimately Open Banking could reform the price comparison market, improve our spending patterns, enhance the online shopping experience, and improve control of our overall finances.


Sources:
https://www.openbanking.org.uk/customers/
https://www.openbanking.org.uk/home/what-is-open-banking/

Call one of our Savings Specialists on 0345 094 2255 or arrange a callback and we’ll get in touch.
Arrange a call back

Arrange a call back

Call us on 0345 094 2255
or email us at DCM@DCMCash.com

Contact Us
View our latest rates

View our latest rates

Our latest rates for all accounts
are updated regularly.

View Rates
Free savings review

Free savings review

See how hard your savings
could be working with our free savings review.

Get in touch