The UK’s nine high street banks were required to have in place the technology to enable open banking by January 2018.
Open banking is a set of technologies that make it easy for you to access and share your financial information and bank transaction history – so every payment in and out of your account.
This data is incredibly valuable because it shows where you work, what you earn, what your hobbies are, what you like to eat and where you shop.
Until 2018, even though the data belonged to you, the banks had kept it under lock and key.
Open banking allows you to take ownership of your transaction data and use it to manage your money and to save more of it.
The first open banking third party apps tended to be fintech start-ups, although some of the larger tech firms and banks have, and are, developing similar applications.
All third-party open banking apps need to be accredited and regulated by the Financial Conduct Authority (FCA).
There are two types of regulated providers – ones that bring together information from different accounts you may have, and those that help you pay companies, rather than using PayPal or Mastercard. Examples of budgeting apps include Yolt and Money Dashboard, while examples of savings apps include Chip and Plum.
You can see all regulated providers on the Open Banking website.
Banks don’t provide the third-party service – although some banks do have their own third party apps. What the banks have to do is give third-party services access to your account; although you do not, at any point, need to share your password or details with them.
This means banks have to provide exact information about every product they offer in a computer-readable format
So interest rates, overdraft fees, and other important details can be ingested and processed by third-party apps and price comparison websites.
This will hopefully make it easier for consumers to investigate and compare different current accounts, credit cards, and loans.
On the 14th March 2020, new legislation came in to force to ensure that banks transition to improved account connections via Open Banking.
Whilst many banks were ready - meaning there should be no issues - some banks experienced last-minute problems. In these instances, you may experience some temporary disruption in terms of how their data is displaying. Many of the teething issues have now been sorted.
The UK’s nine largest banks and building societies support open banking, as well as a wide array of smaller banks and building societies across the country. To see the full list, take a look at the FAQs on the official open banking website.