What is Open Banking?
Open Banking is a government initiative designed to give you more control over your financial information and spur innovation and competition in the banking sector.
This will be possible by making it easier for people to share their financial data – if they wish to do so and at their explicit consent – and compare banking services to ensure they are getting the best rates and are not paying over the odds.
What does Open Banking mean for our customers?
The Competitions and Markets Authority has mandated eight banks and one building society to be part of the open banking initiative. As we don’t offer current accounts, we’re not currently part of the Open Banking initiative.
However, we always ensure that we are up to date with technological developments and endeavour to take advantage of any that could be of benefit to customers. We will be keeping a close watch on how Open Banking progresses so that we can better understand how the new standard could potentially be applied to our products and services for the benefit of our members.
In the meantime, we will continue to focus on providing excellent customer service and long term value to our members through the current suite of products and services we offer. Furthermore, we will not permit the sharing of any customer details or transactions to online aggregators, or any other financial institutions following the launch of Open Banking.
What could Open Banking mean for you?
The aim of Open Banking is to make it easier for new financial services providers to offer more innovative products, services, and a better choice for customers.
An investigation by the Competition and Markets Authority (CMA) in 2016 found that older and larger banks don’t have to compete hard enough for customers' business, while smaller and newer banks find it difficult to grow and access the market.
For consumers, this means many people are paying more than they should for banking activities and are not benefiting from new services.
Under Open Banking, the UK’s major banks and one building society have been mandated to create an open and common banking standard for sharing personal data. The idea is that this will lead to more competition in the banking industry by encouraging the development of new services.
What could Open Banking offer?
Open Banking provides a new way for customers to share information about their current accounts and spending patterns, as well as allowing for innovation in how payments are made. It currently makes it easier for consumers to compare current accounts and other banking services.
In the future, it’s expected Open Banking may lead to new online and mobile services, such as personal finance management tools to analyse your spending and identify where you can save money and help consumers manage debt.
Open Banking could also be used to give you a single view of your accounts in one place, or reduce the need for paper records and manual processing when applying for a mortgage and speed up the mortgage offer or approval process.
Open Banking is entirely voluntary. You do not have to take part in Open Banking – it’s about giving consumers more choice and it can only happen with your permission.
Is Open Banking safe?
You should always take care before agreeing to share your data and if you are unsure about whether a service is legitimate, you may want to check they are regulated by the UK’s financial services regulator, The Financial Conduct Authority. You can do this by visiting https://register.fca.org.uk.