Open Banking explained | Blackbullion

Open Banking explained

There are already 7 million people in the UK using Open Banking, even though it’s only been around since 2015. 

How much do you know about Open Banking? 

Even if you’ve heard of it before, you might not fully understand what it is, how it works or the many ways it can benefit you. 

Here’s a deep dive into everything you need to know, covering:

  • An explanation of what Open Banking is

  • The difference between Open Banking and online banking

  • How your details and money are kept safe 

  • The many benefits of Open Banking for you

First up - what is Open Banking?

Open Banking is a digital option available (for you?) to have more control over your financial information.

In a nutshell, it’s a type of technology that allows a third party to connect to your financial information (usually from your bank account) — but only ever with your consent. 

With your permission, a third party can then view information such as transactions and regular payments, but never edit or make any changes to your information, accounts, data, and details. 

In allowing a third party to see your financial data, you can gain a complete picture of your finances and benefit from automating things that you’d otherwise have to do manually, while always remaining in control of your personal information. 

Why would I want to share my information?

Because there are a lot of benefits! 

Sharing your information with a third party through Open Banking gives you more control and transparency over your money and gives you better ways to manage it. 

For example, you could: 

  • Access budgeting tools that look at your transaction history and give you insights on how to manage your money better

  • Have the ability to see all of your bank accounts in one place

  • Easily shop around for services based on your spending habits (e.g. energy providers or mobile phone contract providers) to find the best deal for you

We talk more about the benefits of Open Banking later on. 

So Open Banking isn’t the same as online banking?

No! Here’s the difference:

  • Online banking is banking that takes place online rather than at your physical bank branch. It lets you bank from your phone, tablet or computer, including checking your balance and transactions, transferring money to someone else or paying by cheque.

It’s still your bank - it’s just digital. The bank holds your financial information, but won’t necessarily show you how that data can benefit you.

Example: You pay your electricity and water bills through online banking. You can set up a standing order through online banking and your bank can see this. 

  • Open Banking also takes place online, but involves sharing your bank information with a third party to get more control over and insight into your money

So, Open Banking gives you more insight into your money and control over who sees your information.  

Is Open Banking safe?

When someone mentions sharing your bank data, the natural question is:

Is it safe??

Open Banking, as well as providing many benefits for you and your money, is very secure. Here are answers to some questions you’re likely to have: 

Is Open Banking regulated?

Yes. In the UK, Open Banking providers are regulated and have to be approved by the Financial Conduct Authority (FCA), the financial services regulator of UK companies - they’re the people that regulate all UK banks. 

You can find a full list of UK Open Banking providers that have been regulated by the FCA here.

Who sees my details? 

The third parties you share your data with will be the only ones who see any of your information (e.g. budgeting apps). 

And can they edit them?

No. The third party will never be able to edit or make any changes to your information, accounts, data and details. 

Can I choose which details are shared?

You get to decide exactly which bank accounts you share with third parties. 

So if you use an Open Banking provider only to see all of your account balances in one place, they won’t also be able to see your transaction history. You’re in complete control of what you choose to share with them, which includes sharing the accounts that you want to share. 

It’s not an all or nothing: you can share information from just one of your accounts or all of them. The choice is yours.

Will they have access to my information forever?

No. You have complete control over how long you share that information, and you can take back that permission by cancelling your account. 

On top of this, every 90 days Open Banking providers must ask you to give your permission again to share your data with them.

It’s important to know that if you opt out at the 90-day mark, the third party will no longer have access to your financial information moving forward, BUT they’ll still have access to any data you’ve previously shared. You can, however, revoke access at any time, even if you’ve already connected to Open Banking but, for whatever reason, change your mind. 

Will the third party see my bank account login details?

No. They won’t be able to access any of your bank login details. 

When you want to connect to your bank account, the third-party provider will direct you to your bank account to log in and authenticate, rather than you having to log in using their app.

So your login details stay strictly between you and your bank. 

If an app uses Open Banking, do I have to opt in?

No. Open Banking is always optional - any service has to ask your permission and you have to opt-in before the third party can access your data through Open Banking. 

If you don’t opt in, though, you may get less value from the app. 

But the choice is yours. Again, you’re completely in control.

What are the benefits of Open Banking for me?

See all your accounts in one place

If you’ve got money in a few different accounts with different banks, and perhaps a couple of credit cards, it can be hard to stay on top of what’s where. 

Using Open Banking, you can see all of your different bank accounts, savings accounts and credit cards in one app, at the same time. 

Meaning you won’t need to keep switching between loads of different apps or accounts, making your life a lot easier.

Fast, accurate money management overview and tips

Who needs spreadsheets?

Many Open Banking providers will look at your spending habits and transaction history and provide you with personalised insights on how you could potentially improve your finances. 

These tailored insights could show you areas where you could cut back spending, as well as information about when and where you usually spend most of your money. 

Shopping around

As mentioned earlier, Open Banking can help you easily shop around for the best deals for you.

You can give a provider access to your transaction history and spending habits, and based on that they can give you the best deals and show you where you could be saving money, for example on your energy bills.

This means you don’t have to go around manually comparing all the different providers, saving you a lot of time and hassle. 

Ability to supply funding/loan evidence easily

If you’ve ever applied for funding from your university or a loan, you might know that it can be a very long process.

Usually, to give evidence of your income and outgoings, you have to download and submit PDFs from all of your accounts. Sometimes you might even have to submit paper copies.

Open Banking makes this process much easier. You can connect your bank accounts and have your transaction history pulled in immediately.

Consider using Open Banking to improve your financial wellbeing

You know we’re all about financial wellbeing here at Blackbullion.

Open Banking gives you a great opportunity to gain better insights into your day-to-day spending and start making the most of your money - without ever compromising your data, money, or safety. 

That sounds like a pretty good deal to us.

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