What is Open Banking and is it safe?

Open Banking blog header

You may have been asked to set up open banking and are now questioning what it is, and is it safe? We’re here to give you all the info you need to know so that you have peace of mind when it comes to utilising this technology.

What is Open Banking?

Back in September 2019 , new EU standards, the second Payment Services Directive (PSD2), came into effect meaning banks have to let you share your financial data with authorised providers, granting them read-only access to things like your spending transactions and regular payments. It was designed to encourage competition in the banking industry, giving you more choice, as well as greater control of your data and how it’s used.


Why is Open Banking useful?

Open Banking meant that you no longer needed to fill out lengthy forms to give third party apps or websites the data they needed. This data could now be accessed directly. But only if you’ve given your permission via your bank’s mobile or online banking! 

Open Banking meant you could choose to share your bank account information securely and electronically with companies like Xero. It enabled a bank feed in accounting packages so that transactions could be automatically uploaded, and did away with the need to manually import statements or link to a third party feed. This makes your data more up to date and accurate and therefore more meaningful.

There are also a number of useful ‘money management’ websites and apps which use your financial data to provide you with a personalised service or recommendations on ways to save based on your habits. These include apps which automatically save for you, provide you with tailor-made budgeting tips, or display all your finances from different accounts together in one place.


Do I have to use Open Banking?

Open Banking is available via most major UK banks but it’s a matter of opting in rather than opting out.

Each provider will ask for your consent to access your information when you sign up to it. It’ll then send a request to your bank, which will process it and share your details.

If you do sign up for an application which uses Open Banking but subsequently change your mind, you can withdraw your permission at any time, either via your bank or through the app itself.


Is Open Banking safe?

Open Banking has been designed with the highest level of security.

Bank level security

Open Banking uses rigorously tested software and security systems. You’ll never be asked to give access to your bank login details or password to anyone other than your own bank or building society.


It’s regulated

Only apps and websites provided by firms which are regulated by the FCA or European equivalent can enrol in the Open Banking Directory. You can check if a provider is authorised on the

FCA Register –  https://register.fca.org.uk/ or

The Open Banking Directory – https://www.openbanking.org.uk/customers/regulated-providers/ 

Providers should also tell you on their website or app if they are authorised, along with the registration number.

All providers also have to comply with data protection rules, including GDPR. 


You’re in complete control

You choose when, and for how long, you give access to your data. You can withdraw your permission at any time.

Providers will also only be able to access data needed for the service you’ve signed up to.

This means if you’ve asked a provider to look at 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.

Extra protection

Your bank or building society will normally refund your money if unauthorised payments are made.

You are also protected by data protection laws. You can make a complaint to the Financial Ombudsman Service as well.

It is important to note that it is possible to use applications that aren’t registered with the FCA but you won’t get the same levels of protection against fraud.

So if you lose money through it, your bank may not pay out. It is therefore important to check that the provider you wish to use is authorised and registered. The links above help with that.


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