What is Open Banking? And why it’s good news for you.
A wave of financial apps have been shouting about Open Banking, us being one of them. Recent figures show that one million customers already use open banking. But what actually is it? If you don’t know, that’s okay. You’ve come to the right place to find out. Here’s a quick run-down on open banking and why it’s good for you.
Open banking rules were passed by the EU in Nov 2015, and had to be in place by 2018. It meant that big banks had to give their customers the option to share their own transactional data with third parties. These ‘third-parties’ are apps and websites that are not part of your regular bank’s services.
For you, the customer, this is a good thing. It means that banks are no longer in charge of who has access to your information. This is how it should be. It's your data, you should decide who can see it.
Before a third party can gain access to your data, you have to give your permission. This is done by authenticating yourself using your banking app (don’t worry if that sounds complicated, the apps guide you right through it). Throughout the process, the data has to be encrypted with the most advanced security measures. And any platform that uses open banking must abide by GDPR rules. Finally, every-time you want to grant additional access or make a payment, you will be asked to confirm and verify this within your banking app, which often uses biometric authentications (ie. face ID or touch ID), making the transaction process that much more secure than just typing in your PIN. It’s entirely up to you whether to share your data with any third party, and you can also revoke their permission at any time if you wish to.
Access to information has disrupted the banking sector. For so long, the industry has been dominated by a few big names. Open banking has increased competition. For people like you, this means lower prices, better products or even both.
When you take out a loan, you have to show details of your finances to prove you’re good for it. Open banking means that lenders can get the information they need directly. It’s quicker and you’re likely to receive better deals.
The current payment system is complicated. Quite frankly, it’s outdated. It goes something like this; you make a purchase, the retailer contacts an “acquirer”, such as WorldPay, who then gets in touch with the likes of Visa to take the payment from your account. After that, you fumble around with your card and your pin.
Open banking cuts out the middleman. You pay directly from a bank account. It’s quicker and cheaper...especially when you use Roqqett (just saying).
The workplace of today looks dramatically different to the workplace of yesterday. Beyond technological changes, there are social changes. As such, more people are working for themselves. Whether it’s a side-hustle or full time role, you’re probably familiar with an integrated system like Xero or Quickbooks.
These systems automatically update when you send or receive payments. It’s an easier and less costly accounting process.
Open banking allows apps like Roqqett to have multiple bank accounts in one place. For the user, it’s useful because it gives a clear picture of their finances. So, you can keep track of your payments and avoid going overdrawn.
The referencing process for letting agents is a difficult and long winded process. It requires a lot of information including 3 months of bank statements. But open banking provides near-instant access to more detailed information on tenants’ financial position. As such, getting approved to rent a new flat should be easier.
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