Warning: Late repayment can cause you serious money problems. For help, go to moneyhelper.org.uk/en

What is open banking?

What is open banking?

What is open banking?

Imagine being able to log into one website or app and see all of your current accounts, credit cards and savings in one place.

Well, thanks to open banking , you can.

Open banking can help you move, manage and make the most of your money.

Here, we're going to explain the benefits of the open banking system, and how you can keep your financial data safe online and use it with confidence.

How does open banking work?

Since 2018, the UK’s nine largest banks and building societies have been required by the government to open up their financial data.

These banks and building societies must share customer data by allowing authorised third-party developers to ‘plug in’ to your personal data in a secure way - but only if you give them permission.

It allows consumers to view multiple financial accounts in one place and improves competition in the online banking industry.

Who is involved with open banking?

All of the UK’s nine largest banks and building societies must allow authorised third parties access to your account data.

This means that you can have your current account with one provider and a loan, credit card or mortgage from other suppliers - and view them from one just online interface.

You can also connect your bank account to an app that analyses your spending and recommends new products like credit cards or savings accounts that will save you money.

The nine largest banks and building societies involved are:

  • AIB Group UK (First Trust Bank in Northern Ireland)
  • Bank of Ireland (UK)
  • Barclays Bank
  • HSBC Group (including First Direct and M&S)
  • Lloyds Banking Group (including Bank of Scotland and Halifax)
  • Nationwide Building Society
  • NatWest Group (including NatWest, Royal Bank of Scotland and Ulster Bank)
  • Northern Bank Limited (trading as Danske Bank)
  • Santander UK

Many other smaller institutions have also embraced open banking.

What are the benefits of open banking?

Open banking means you could potentially manage all of your financial accounts and household bills through a single digital platform, with the option of allowing other apps to ‘plug in’ to your account data and offer more personalised services.

You can choose to share your current account data with registered companies (known as third-party providers) and also pay in new ways.

For example, an app might be able to help you avoid overdraft charges or boost savings by moving cash between accounts with different providers, automatically.

Currently in the UK there are 319 regulated open banking providers; 230 third-party providers and 89 account providers.

In theory, open banking could also encourage you to look at your utility or phone and internet bills by analysing how much you are spending each month and recommending better alternative deals.

Can I opt out of open banking?

A simple answer - yes. It's an opt-IN scheme, and a key aspect is that you don't have to share your data if you don't want to.

Open banking rules say that the nine largest banks and building societies must allow your details to be shared, but ONLY if you clearly give permission to the new provider – they can't just look at all your accounts whenever they choose.

Each third-party provider must ask for your consent when you sign up for their service. You can withdraw your permission at any time.

If you just want to continue with how you bank now and don't feel comfortable sharing your account data, you don't have to.

No-one is going to force you to use open banking.

How can I check if a provider is authorised?

You can check if a provider is authorised by searching the Open Banking Directory or FCA Register.

All the financial firms involved should also state on their website or app that they are authorised and display their registration number.

If you do opt to use a third-party provider that's not fully regulated, you don't get the same levels of fraud protection. This means it’s vital to check out a provider before you give them any kind of access to your accounts. You can do this on the FCA Register, and if they aren’t authorised, you should ask them what security measures they have in place.

Currently open banking is used and trusted by more than three million UK users.

What data from my bank account am I sharing with financial services firms?

If you do agree to participate in the open banking scheme, you'll be allowing authorised third parties to potentially have access to basic account information such account balance and incoming and outgoing transactions.

Is my financial data secure with open banking?

Providers are only able to access the data they need for the service you've signed up to – so if you've asked one to show details of your current account with one bank, it wouldn't also be able to look at a credit card you hold with that bank unless you give your express permission.

And all providers have to comply with the UK's data protection rules, including GDPR.

As always when it comes to your finances, if you're unsure about anything, make sure you read all the details before you give anyone else access. And of course, if something doesn't feel right, don't share your data.

Remember - if you don't want to opt in, you don't have to.

How do I know open banking is safe?

The UK's open banking system has been designed with security in mind - here’s how it makes sure that your data is safe.

  • You’re the boss: Only you choose if you're giving access to your data.
  • Maximum security: Open banking uses thoroughly tested security and software systems.
  • Full protection: You’ll be protected by data protection laws and the Financial Ombudsman Service, plus your bank or building society will repay any money lost in the unlikely event that fraudulent payments are made using the system. The maximum you're liable for is £35 before you tell your bank about the fraud, and nothing after you've told them, so always notify your bank as soon as possible.
  • Fully regulated: Only apps and websites from FCA-regulated providers can enrol in the Open Banking Directory. But you do need to ensure that the third party provider you’re going to share your data with is authorised.

So ... should I use open banking?

The honest answer is that it's completely up to you. As we've hopefully explained, open banking has the potential to transform how you manage your money.

But it's for you to decide if you're happy sharing your data with third parties with the aim of being more in control of your finances.

Did we miss anything? Let us know by sharing your tips!

More from Anissa

Hi, I’m Anissa, an author for Dot Dot. My passion for writing started from a very young age when I used to write news articles for my primary school! I love blogging and producing enjoyable content. Outside of work, my hobbies include fitness and music. I love cooking, baking, and trying new recipes. I also enjoy browsing Netflix and immersing myself into a good series. I’m here to help make your financial journey smoother with some helpful hints and tricks! I hope you enjoy reading them.

Short-term loans: 1228.67% APR Representative