The aim of this is to allow consumers to have control over their banking data. By giving the banks permission to share their data, consumers are opening the door to a more personalised banking experience. Examples include that of tailored saving schemes, alerts for better offers such as broadband, and open banking is also looking at monitoring your spending to identify abnormalities quicker and alerting the appropriate authority. Anne Boden, CEO Starling Bank, talks about the possibilities of your bank sharing your spending data with a calorie counting app, which can then cross reference your eating habits with your exercise expenditure. The opportunities of open banking reach beyond the simple control and monitoring of our finance. Open banking will allow for us to improve in all areas of our life with greater ease.
Open banking works through using Application Programming Interfaces (API’s). API’s are programming rules which allow your bank to transfer your spending data to your approved new service. Any company offering the open banking service is regulated and monitored by the Financial Conduct Authority (FCA), who enforce severe consequences for any company who does not take the security of data seriously. The General Data Protection Regulation, set to be in force in May 2018, includes fines of up to £20million or 4% of the company’s turn over.
One of the great thing about open banking is how specific it can be. The consumer can decide what data is shared, who the data is shared to, what can be done with the data, and how long their data can be accessed for.