New age of Open Banking arrives in the UK

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Big changes are underway across Europe concerning in the way people bank and manage their money after new rules came into force.

The start of the Open Banking system gives individuals, small businesses and entrepreneurs more freedom over their money, meaning for the first time that they can allow organisations other than banks to access their financial data.

This includes the ability to hunt for the best deals without lengthy delays, possibly by using online apps or services to analyse their spending habits, and the option to quickly change accounts between banks or building societies.  

Charging extra for paying via a credit or debit card, or an online service such as PayPal will also be banned, as the regulations look to make banking fairer and more open for everyone.

Businesses and start-ups could be set to benefit from the changes, with the ability to offer a whole new range of services to consumers looking for the best deals and advice. Open Banking would allow for services such as money management apps to track a user's spending habits, a tool that warns if a customer is set to go overdrawn, or wider price comparison services.

However the launch has raised fears concerning exactly how companies will ensure they protect customer data, although all companies looking to use Open Banking will have to be regulated and registered on a directory. Companies or start-ups looking to offer new services will also need to prove they can withstand cyber-attacks and keep their users safe.

“Open banking has the potential to offer consumers more control of their finances and boost choice but it also comes with potential risks around data privacy and security," said Gareth Shaw, money expert at watchdog Which?

“Regulators and industry must ensure that customers are properly protected from data breaches and scams, which is vital if consumers are to use these services with confidence and trust.”