banking is about to undergo a major shift
In fairness, banking has come a long way over the centuries but, for the most part, the power dynamic between banks and their customers has stayed about the same.
Whether you bank in person, over the phone, online or mobile, our relationships with banks haven't changed much alongside the technological advancements. You set up an account with your bank, they facilitate the ebb and flow of your money, and, as a result, they hold the data around that money. All of the history around your purchases, loans, payments, debits, and credits rests with them. With the arrival of Open Banking, all of that is going to change…Big changes are on the horizon.
Open Banking gives the power back to the customer. Instead of the banks themselves, now customer will own his banking data, giving you the power to share it with third parties, such as other banks, products, and services.
Customer can get into all the nitty gritty details on the official Open Banking website,
A quick run down below of Open Banking's key impacts:
With Open Banking, the ball is in your court - you can choose exactly what you do (or don't do) with your data and exactly who you share it with. And if you change your mind, you also have the power to revoke any consent you've given. Pre-Open Banking, customers just had no say in the matter, so having the control to decide is a pretty big deal! And alongside this newfound choice, Open Banking will make more options available to customers than ever before.
All of this choice will make it easier than ever to get the absolute best offerings and deals available to you. And we're not talking the best deal generally, we mean your best deal. Together, these personalized options and propositions will create a unique ecosystem for each customer, a bespoke network of services and providers that meet your needs as and when you need them.
3. Security & Privacy
Ultimately, whether or not your share your data is totally up to you. But it's worth knowing that under Open Banking, your financial data will be more secure than ever before. All banks, apps, companies and other third parties operating under the Open Banking structure are measured according to the absolute highest standards of privacy and security - the Financial Conduct Authority and the National Competent Authority.
some of the real-life benefits of Open Banking:
1. Easily compare current account offerings from different banks so you can find the best option for you
2. Get better deals on credit cards, loans, and mortgages by easily comparing them across different financial institutions and third parties based on your personal situation
3. Get a clear view of your accounts in one place .
4. Easily monitor your various bank accounts and credit cards for any fraud
5. Use a single platform to easily and securely manage your money across various services and providers, from insurance to online shopping .
Behind the scenes: How Open Banking came to be and how it works
Bringing Open Banking to life has relied on two key types of development: New legal regulations and the technology to deliver them.
PSD2 (Payment Service Directory 2): This European regulation aims to create a more integrated and efficient payments market, leveling the playing field for new players,
including non-banks and other platforms .
CMA Order (Competition and Markets Authority Order): Like PSD2, the CMA Order aims to increase competition, but places more focus on the customer in the retail banking industry. The CMA is implementing the necessary measures and reforms to create a more transparent and technology-driven relationship between financial institutions and their customers. Open Banking is one of these key measures.
Through PSD2 and according to the CMA's reforms, Open Banking will officially come into effect on January 13th, 2018. Together, these regulations ensure a standard and secure way for financial institutions and services to connect to one another, to share data, initiate and receive payments, and more.
The key technology:
APIs?If you're wondering how exactly these aforementioned institutions and services will connect, the answer is APIs! An Application Programming Interface is a piece of software that enables the exchange of information between programs and authorizes a specific operation. Open Banking requires that banks make their APIs available, enabling individuals and third parties to access financial data securely.