I think it’s great that Open Banking is getting more and more media coverage, most of which highlight what Open Banking can offer consumers and small businesses alike.
But, I’m bored of seeing the same scaremongering headlines that keep cropping up, warning of the ‘dangers’ to come.
So, I wanted to weigh in on the matter and highlight (with the risk of sounding a lot like Donald Trump) fake news! – Insert a bad fake tan and wagging finger here.
Let's get into the headlines.
“Banks will be sharing your data with any third party that asks for it”
In today’s age, personal data and who it’s shared with is something that plays on the majority of peoples minds. As consumers, we don’t want random third-party businesses using our own data to market to us, cold call on the weekends or to share with other businesses to benefit their own bottom lines.
But that’s not what’s going to happen with Open Banking.
You are in control of your data.
You are the only one who can choose to share your data. And the only people it will be possible to share your data with will be heavily regulated and trusted third parties. There are even rules around the clarity of what information will be shared and for what reason, so you can make the right call for you about whether to share your data or not.
Which brings me to the next headline.
“You can’t opt out”
This headline isn’t entirely false, but it is misleading.
Open Banking isn’t compulsory for consumers and you won’t have unknowingly ticked a box to allow your data to be shared with any Tom, Dick or Harry.
There is no opting out because you don’t need to. If you don’t want your data shared, simply don’t share it.
“Your data won’t be safe anymore”
This headline couldn’t be further from the truth.
The addition of an Open Banking API (Application Programme Interface) doesn’t make your data openly available to anyone who asks for it and the release of this Open Banking API won’t cause a financial or global meltdown along the lines of E Corp in Mr.Robot (Side note: If you haven’t seen this series, I highly recommend it).
This API has been put in place to ensure that the passing of data from your bank to a trusted third-party is secure. Meaning your data will remain as secure as it is today.
If you’re like me, a technical novice, and want to understand the logistics of how an API works, I found this post by UpWork really helpful.
"Open Banking - the new enforcement from Brussels"
Although true that the European Union has implemented the PSD2 (Second Payment Service Directive) legislation, which instructs large banks operating within Europe to build an Open Banking API, it hasn't been forced upon the UK to implement, as some media outlets would have you believe. In fact, quite the opposite.
The UK has been one of the driving forces behind the implementation of this legislation along with the CMA (Competitions and Markets Authority).
It was found by the CMA that the financial services sector in the UK has a lack of competition and innovation. The big name banks dominate the industry with little or no one challenging them. Because of this the CMA looked into the supply of personal current accounts and the banking services to small and medium sized enterprises. Highlighting that these big name banks should be supplying their customers with their data, to do what they wish with. Enabling other financial technology (Fintech) businesses to create new and innovative products that can aide and improve the current banking systems for both consumers and small businesses.
“This technology won’t be available until late 2019”.
Many journalists have been pointing out that although the Open Banking API will be available at the start of 2018, the various Fintech businesses it’s designed to empower, won’t be able to create the tech needed fast enough to drive this modern generation of banking until the end of 2019.
Well, I beg to differ.
The Nesta Open Up Challenge has mandated the banks to grant 20 UK businesses early access to anonymised Open Banking data, allowing them to get a head start and begin creating banking platforms that will aid consumers and small businesses in 2018.
Handle is one of the 20 UK businesses selected for this. We’ve covered more about our Nesta Open Up Challenge win here.
This early access is allowing us and 19 other businesses to change the banking and financial sector. Whether that’s a platform that allows you to manage bank accounts from several providers in one place, smart technology to forecast cash flow or predictive savings on current spending. The possibilities are endless.
You can get your hands on the future of banking technology before anyone else.
Join our beta test by entering your email address below.
The future is bright for consumer and business banking, with endless possibilities and exciting innovations to come.