Ask the question above of anyone who understands and appreciates Open Banking and their answer would be ‘no’. Yet in recent days, some press articles have raised fears that the most sensitive of data people have – their financial information – will be put at unnecessary risk through Open Banking. techUK wants to set the record straight – such messages produce unnecessary concern, are misleading and could undermine this exciting project.
The ethos behind Open Banking and the PSD2 (the underlying legislation) is to increase the ways customers can make the most of their finances – give them more information and more possibilities to enable them to use their money better. In short, provide benefits. But using or not using these services is up to the customer. Open Banking and PSD2 will widen customer choice and that choice is based on detailed consent. No new provider will be able to get access to customer data without their say-so.
As explained in a recent post, ‘Open Banking’ in the UK puts into place the infrastructure and the rules needed to enable new types of financial service to work. Many of these types of service have been around for years – account aggregation, comparison services – but Open Banking creates a more secure and wider way for them to operate. It does this by:
- requiring them to be registered with the FCA;
- enabling them to operate on secure APIs;
- allowing them to tailor their service to the individual by basing it on a customer’s real-time current account data.
Open Banking and PSD2 together are innovations that will bring benefits to all users of financial services while putting security at its heart. techUK strongly believes this.
And Open Banking is only the first step
As we set out in our recent paper From Open Banking to Open Financial Services – the Long View, PSD2 can be the catalyst for a digitalised financial services eco-system that can fully exploit the potential of tech to improve people’s lives.
Change can of course be unsettling, even frightening. But the only way to make things better is to change existing systems. Open Banking will not happen overnight: it is still work in progress and has a long way to go to reach its best.
But PSD2 opens doors to changes which can vastly improve our ability to make the most of our finances. Read our White Paper for more information on the steps needed to get there.