The way that we bank will change radically this weekend, but few consumers in the UK understand the impact of Open Banking, and how it will transform their personal finances.
From today (13th Jan), banks will be able (with permission) to open up their archives of spending data to licensed financial services providers. From technology providers to retailers, a whole new set of data will provide information on how & where we spend our money.
The new rules aim to bring more competition into the banking marketplace, and we have already seen the emergence of new players who are radically changing how we bank.
But what is really in Open Banking for us?
At the very least, customers should expect easier access to their information. Using one banking app to see information from accounts at multiple banks is one opportunity, assuming you’ve opted in to share that data.
I expect to see a raft of apps that will tap into that freedom of information, like Yolt, Plum and Bean – these platforms will allow you to aggregate your balances from multiple accounts (Current, Savings and Credit Cards) into one screen.
The promise is that these apps will help you save money, with providers using the data you share to offer you the best services and the lowest cost.
In the last few years, we have seen new banks emerging, ready to tackle the technology and societal needs of customers more seriously. These new providers have been agile enough to steal a march, particularly with younger customers.
A new breed of banks that run as apps on your phone e.g. Monzo, Revolut and Starling, offer new features in packages that suit a mobile-first world. These modern banks will be the first to offer revolutionary services in the banking field. For example, Revolut already offers the ability to buy and sell Cryptocurrencies directly from the app, next to a current account.
These new providers will be different to traditional banks, offering advice and guidance on the most suitable products, and we should expect to see technology take a lead here with machine learning and AI providing new insights and methods for managing money.
All of these apps will need to be licensed by the Financial Services Authority, meaning that consumers can feel safe knowing that their data is handled appropriately.
Open Banking should also allow for easier switching of accounts, meaning consumers can hunt around for the best deals without the challenges of moving an account from one provider to another.
Open Banking improves Customer Experience
Ultimately, the consumer stands to gain from Open Banking. The build of new apps and services will open up new choices for customers. Increased transparency and competition will create a new standard for customer experience.
Provided consumers exercise some due diligence in ensuring that services are covered by the FSA, then there is only upside.