It’s come about through a series of reforms that started in October 2015. The European Parliament’s Payment Services Directive aimed to promote the development of new technology for online and mobile payments.
It had no impact because in August 2016 the UK Competition and Markets Authority (CMA) made a ruling. Since then the nine biggest UK banks must allow licensed third-party providers to have access to their (and your) transactional data.
You can give permission to third-party providers to have access to your bank accounts, as long as you have online access. You don’t have to give access if you don’t want to.
There are two main ways that this could benefit you:
1) Account information services
You will be able to see everything in one place. This is already being seen with Barclays. If you give them access to the data for your other banks, you can see all the data in one place, in their app. It should make managing your money much easier.
2) Payment initiation services
You will also be able to pay companies direct rather than going through Visa, for example.
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They could be anyone, but you will only be protected by your bank if you share data with authorised providers. These providers will be on the FCA’s Register, and/or the Open Banking Directory.
The same way that others get access now:
Screen scraping: you share log in details, and they can see your data but not change anything. This won’t be allowed after September 2019.
Application programme interfaces (APIs): a safer way to share your data, you don’t have to share your log in details. This is the way that most apps you use today, know your location, for example.
The biggest, regular transaction in the bank account of most of us is payment of rent or a mortgage. Traditionally, we’ve contacted the landlord or agent managing the property a prospective tenant has been renting to find out whether they’ve paid on time and in full. Now there is another way, thanks to open banking.
Keysafe is an authorised third-party provider. This means, when we’re given permission by the prospective tenant, we can see their financial information in seconds.
This totally changes the way we can do tenant vetting. It’s quicker, practically instant. And because we’re using an API that follows the CMA guidelines, it’s more secure.
For more information about our Preview service that uses open banking, contact us now on email@example.com.