Everything you need to know about Open Banking

The phrase Open Banking has been rife within the finance technology (Fintech) industry over the past few months, but I’m sure the majority of people reading this are yet to come across the term.

Hearing it for the first time you're probably thinking, what is it? A shake-up of banks opening times? A banking free-for-all that anyone can access?

Actually, it's none of the above.

In this post, I'm going to iron out what Open Banking is, where it's come from and the ins and outs of how it works.

The background

The Competitions and Markets Authority logo

Way back in 2013 The Competitions and Markets Authority (CMA) started a review of the current UK retail banking industry.

Incredibly it took a 3 year-long review before the CMA published a report in August 2016 that unsurprisingly found that the financial services industry lacks innovation and more importantly, competition.

The CMA found that smaller financial technology (Fintech) companies are unable to penetrate the banking market as it’s dominated by the big name banks. This domination is deemed detrimental to consumers and small businesses who are potentially paying too much for financial services, forced to use clunky and long-winded financial application processes, as well as missing out on new and better ways of managing money.

Democratising data

The key factor in changing the current status quo is offering the ability for all of us to use the information the banks hold about us to get the things we want cheaper, easier and from anywhere we choose. Information about us that is currently locked up for the sole use of our bank will be made available to us, so that finally, we can choose what we do with it and who is allowed to see it.

To facilitate this democratisation, the CMA and the Government ordered the largest 9 banks in the UK to start creating secure API’s. These APIs will allow all of us to securely send encrypted data from our banks to a number of other highly regulated and authorised financial technology businesses.

This means that instead of sending 3 months-worth of bank statements to a mortgage provider and waiting for those to be manually checked, you could simply connect the mortgage provider to your bank account and have a mortgage application decisions in minutes not days.

It’s this type of control and use case that is unavailable today, but which absolutely should be. Making this data open and available where it creates efficiency, saves money and increases options for us in our daily financial lives is where the term ‘Open Banking’ has come from.

The timeline

The banks have a deadline. They need to make their APIs available by January 13th, 2018. This will create the opportunity for regulated and trusted Fintech businesses to start creating tools, platforms and applications that have the opportunity to make our lives better.

The opportunities are only limited to the minds that create them.

Who's involved?

Handle Open Banking 9 banks image

The 9 UK and Northern Ireland banks involved are:

  • Barclays
  • Lloyds
  • Santander
  • HSBC
  • The Royal Bank of Scotland (RBS)
  • Nationwide
  • Allied Irish Bank
  • The Bank of Ireland
  • Danske Bank

So if you bank with one or more of the above you'll be able to take advantage of Open Banking.

Although these 9 banks have been instructed to build an Open Banking API, it is possible for smaller UK banks to also take it upon themselves to build an Open Banking API sometime in the future.

How does it work?

The 9 banks that are taking part in the Open Banking legislation are creating an Open Banking Application Programme Interface, or API for short.

Now, unless you're in the tech industry or a coder yourself, you probably won't know what an API is or how it works.

An API is a mechanism that allows information to be shared securely between two parties. For example, when you connect your Facebook account to Handle, after confirming the T&Cs you get redirected to Facebook to log into your account. In the background, Facebook, with the consent you provide is allowing us to see certain information about your Facebook page through their API. All the data is encrypted, we never see any log in details, such as usernames and passwords, so your account remains as secure as it always has been. This is the same process that will be built for Open Banking.

How secure is Open Banking?

Multiple safeguards will be put in place to ensure that the passing of data from your bank to a third party provider is secure.

Any third party provider that's looking to use Open Banking APIs has to be approved by the Financial Conduct Authority (FCA) before they can even be considered to appear on the Open Banking Directory. Only businesses on the Open Banking Directory will be able to connect to your bank securely and this is checked and approved by your bank whenever you connect to a third party.

You are always in control, no one can access your information without your approval. After reading the terms and conditions presented by a third party provider you can simply choose whether or not to share your information with them.

When does Open Banking launch?

The 9 involved banks have a deadline to build their Open Banking APIs before the 13th of January. This will make Open Banking a reality from then on, although in reality, it will take time to build solutions that make use of these Open Banking APIs.

Handle open banking beta test image

Handle will be one of the first examples of a product using Open Banking. Handle will supercharge any business bank account letting you take full control of your business cash flow and see your financial future. To be one of the first people to get access, sign up for our beta test today.


If you have any questions about Open Banking, feel free to get in touch with us at [email protected].