Open Banking 'revolution' to challenge banks' dominance

From BBC - January 12, 2018

A fundamental change to the way people can bank, manage and spend their money in the digital world is under way.

A change in the law and the start of the Open Banking system means people can allow businesses, other than their bank, to access their financial data.

Organisers say this has the potential for consumers to get better deals, such as cheaper overdrafts, and to speed up the switching process.

But warnings over fraud risks have already been issued.

As part of the same legislation, surcharges for payments made by credit card, debit card, or other payment systems such as PayPal will be banned.

How it works

Traditionally, banks have held all our information about our past transactions and spending habits.

A change in UK law now means that banks and building societies must allow regulated businesses access to a customer's financial data, but only if the customer has given their permission.

The bank can only block access if it suspects fraud or unauthorised access.

The UK's Open Banking system should ensure that such access is given by the UK's nine biggest current account providers in a secure way, and without the need for customers to reveal their online banking login details or passwords.

The main idea is that individuals can allow apps and online services to analyse their spending and find better deals on everything from loans and mortgages to shopping and broadband. Customers can give, and withdraw, permission at any time.

Imran Gulamhuseinwala, trustee of the organisation overseeing Open Banking, said: "It is difficult to overstate just how revolutionary open banking could, and should, be. New products will emerge from incumbents and entirely new entrants will join the market."

Open Banking in action

Examples of new services include:

Source: Open Banking

Delays and concerns

The Competition and Markets Authority (CMA) told the UK's nine biggest current account providers to be ready to start Open Banking by 13 January. However, only four - Allied Irish Bank, Danske, Lloyds Banking Group and Nationwide Building Society - will be fully ready to begin.

Card surcharge ban


Continue reading at BBC »