Over a year and a half ago open banking was heralded as a revolutionary way to handle your money.
You would be able to track all of your bank accounts at the push of a button. Controlling your direct debits, comparing household bills and track your payments.
Consumers can now provide their consent to allow for financial transaction data to be accessed without requiring them to give their personal login credentials to a third party. The government backed the new development so that more competitors will join the marketplace.
The law requires UK banks to share their current account holder data through application programming interfaces (APIs). APIs essentially allow different forms of software to communicate well with each other. The main focus for open banking is to provide customers with different products that are better suited to their needs.
Who has implemented open banking?
There are countless apps out there that are aimed at helping you with your finances. Ranging from debt management, investment, retirement planning, credit analysis and more. Even high street banks are now developing and releasing apps that enable you to view all your accounts with them. HSBC has taken an extra step with this by letting you view all accounts you have with HSBC and its competitors as well. Thus, creating a convenient app that shows your whole financial situation in one place.
Why isn’t open banking popular now?
The main concern that people have with adopting this type of service is that they aren’t familiar with the companies who have access to their personal financial details.
The launch of open banking came at a time when banks became synonymous with poor digital security. However, lots of the supporters of open banking are trying to dispel these concerns by maintaining data security.
The expectation is that over time there will eventually be a mass adoption of these types of apps and digital money assistants. However, for that to happen open banking first needs to demonstrate return on investment, maintain trust and respect the data received from its users.
Though the industry is still in its infancy, if customers become educated on the safety of their data and the value open banking provides, eventually it will build this trust that will push open banking into the next stage.
Reference – DCM010 – Aug – 2019