By now, you are probably aware of the term ‘Open Banking’, but there’s not been so much coverage in mainstream media discussing what open banking actually is. As technology quickly advances and changes the way both consumers and businesses access and use money, keeping on top of the new products and terminology can be tricky and confusing.
Open Banking is a service which allows banking businesses and financial services organisations to view your financial information in order to provide tailored products and services to suit your financial circumstances. Open banking also allows you to directly view your finances in a clearer way; instead of having multiple bank accounts which you have to look at individually, open banking allows you to see all of your finances in one place.
How does Open Banking work?
Companies cannot view your financial history without your consent, however, once you give consent to the use of open banking, it works by allowing the company that you approved to view your transactional data through a secure framework.
Some banks, such as Barclays PLC, Nationwide, Danske, HSBC, Santander, RBS, Lloyds Banking Group PLC, Bank of Ireland and AIBG must share certain information through open banking by law, although many other smaller banks and building societies are also opting in to the open banking platform.
As well as banks, many financial providers also use open banking to offer customers suitable products for their financial needs, as well as using it to review applications for credit and make responsible lending decisions.
Every UK institution that uses open banking is regulated by the Financial Conduct Authority (FCA), and if you aren’t sure whether a company is regulated, you can always check the Regulated Providers register on the open banking website to check that a company requesting your banking information is regulated and authorised.
Can I benefit from using Open Banking?
You can benefit from open banking in various ways. Directly, open banking can help you manage your finances with ease and with a full view of your income and expenditure. It’s not unusual to have multiple bank accounts and borrowing facilities, but that doesn’t mean it’s easy to keep track of it all. Open banking means you can see all of your incoming and outgoing payments in one place, so you can adjust your budget and manage your disposable income without running the risk of missing out specific bills and/or essential payments.
Additionally, organisations can use open banking to help them decide if they should give you access to a specific product or service. Many lenders now use open banking to view your financial data such as salary receipts and rent/mortgage payments. With an accurate view of your income and expenditure and an idea of your typical spending habits, lenders can make more responsible decisions when it comes to lending money, which means you are less likely to be approved for a loan or credit product that you can’t afford. It may seem unhelpful at first, especially if you desperately need the money, but lenders must lend responsibly. If you have been declined for an application, it might be worth taking a look at your finances and seeing if you can make any direct changes to free up a little more cash each month, so you don’t need to rely on credit.
Does cashasap.co.uk use Open Banking?
Some cashasap.co.uk loan applications might be subject to an additional affordability assessment – this is part of making sure we only lend money when we believe a customer can afford to repay it. We use an FCA authorised credit reference agency called Credit Kudos, who allow us – with your consent – to analyse your financial data through open banking.
We know it can be daunting allowing organisations to access your financial information, especially if you’ve previously been a victim of fraud, however we can assure you that your financial data is always accessed securely and we will never sell it to third parties or use it for marketing purposes.
