Open Banking

What is Open Banking?

Open Banking is an online-focused initiative supported by a number of large banks, building societies and FinTech startup companies which aims to make it easier to share your data with relevant parties.

Launched on the 13th of January 2018, alongside the Second Payment Services Directive (PSD2), Open Banking has seen a relatively slow start in terms of new innovative ideas coming to the market.

The backbone of the system is its reliance on the principles of Data Sharing, which makes it similar to the way lenders and Credit Reference Agencies use your information.

For it to work, both your bank and the service you want to share your personal information with need to be adopters of the platform, which in itself is partly responsible for its slow adoption.

Q: Is Open Banking compulsory?

A: No – you are free to opt into or opt out of Open Banking at any time. No one is automatically opted in by default, you need to first give your permission before your information can be shared.

Q: What are the advantages?

A: From a consumer point of view, Open Banking makes transactions that require access to your financial details simpler. Rather than having to provide a lender with all the required information yourself, you should in theory be able to click a couple of buttons to share your information as it appears with your bank with the right service.

The platform also promises to make it easier to see competitive pricing so you can shop around for the best prices

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