Updates in finance can be yawn-a-rific, but Open Banking is different. It’s a revolution for financial services. It’s moving at speed and the trajectory’s good.
What is Open Banking?
Say you book a flight on an airline app. You’ll probably be shown prices for travel insurance, local car hires and hotels. Taxis and restaurants too.
In the travel industry it’s all about ease, choice and seamless customer journeys. It’s about openness and collaboration with partner companies to ensure customer satisfaction. It’s worlds apart from traditional financial services.
Old school financial firms kept their cards close to the vest. They didn’t share the spoils. They certainly didn’t open their doors so competitors could have a sniff around …
Then Open Banking changed everything.
Introduced in 2018, Open Banking required banks to share information with others in the names of more competition and innovation – all for the good of the customer.
As we speak, Open Banking is bringing customers like us more clarity, choice and convenience so we can make better decisions in our (financial) lives.
Example?
Perhaps your bank allows you to pull other account balances into its smartphone app. Or maybe it now matches you with timely loan offers that actually make sense.
Maybe you use a budgeting app which shows all your credit and debt or tracks your pension and investments. Perhaps mortgage deals tailored to your income and budget are in the palm of your hand as we speak.
Behind these apps, products and platforms sit Open Banking rules and innovation.
In days to come such products and services will be as familiar to us as Apple Pay. Open Banking is changing, and will continue to change, how we all work with money.
Is Open Banking catching on?
In a word, yes – and at speed. As recently as last week the number of UK customers and businesses using Open Banking services reached 7 million. The project has enjoyed such traction in the UK that Australia, Canada and Singapore are following our lead.
Open Banking is pushing big banks and institutions to raise their game, while a new generation of financial technology (AKA FinTech) start-ups are empowered to find gaps in the system and plug them with products and services that make customers’ lives easier.
The main initial concerns around Open Banking centred on security, but early fears haven’t come to pass. Secure technology and strict regulations are baked into Open Banking’s foundations and it has so far proven safer than traditional data sharing.
What’s next for Open Banking?
Helena here, and I recently spoke at an Alt-Fi Cost-of-Living webinar (available on Apple & Spotify) alongside Chetwood Financial and Freedom Finance. Although the topic is pretty depressing, all parties were positive and hopeful about Open Banking and what’s ahead.
Open banking has barely scratched the surface of its potential on the road to informing customers, broadening choice, improving decision-making and, ultimately, adding value to people’s lives.
And that’s what we do here at Money Means. Thanks to Open Banking, we’re able to put our experienced financial planning lens over people’s lives.
We ask about your present, your vision, your values and your goals so we can offer a holistic look at your finances, and help you plan your money — in a clear and straightforward way — for the life that matters to you.