What is open banking?

Holly Thomas

Open banking was introduced on 13 January this year – find out more about what it is, and how it could help you save money.



Open banking was introduced this month for current accounts – but what exactly is it?

Put simply, it will allow companies to access current accounts to gather information about how people can improve how they run their money.

Banks and other registered financial services companies – known as Third Party Providers (TPP) – that may launch as a result of this new scheme will be able to offer tailored money saving services.

What are the benefits of open banking?

By analysing people’s transactional behaviour, they could help recommend a different bank account that might save them money in bank charges or gain them more interest by finding an account with more generous terms.

A TPP app might also use the information to find credit at a competitive rate, real-time updates on spending and cash withdrawals. Or even find credit when it has been refused elsewhere.

An app might also help manage money better. For example, it might help consumers avoid bank charges or boost savings by automatically moving money between accounts.

Is open banking safe?

With financial fraud now the most common crime in the UK, security and fraud is a huge concern.

Crucially, open banking is something that you have to opt into. So if you do nothing, nothing will change. A report by Accenture showed that the majority of consumers (59%) would trust only their bank with their account information, so the take-up could be small.

However, for those who do wish to engage, there are security issues to bear in mind.

Fraudsters will be poised to find ways of using open banking to steal information  – and money. Copycat websites pretending to be TPPs could start emerging and some conmen might set up as fake TPPs outside the UK that will therefore fall outside regulations from the City watchdog, the Financial Conduct Authority (FCA). It’s important to be on your guard.

Protecting customers

The FCA has put strict rules in place to protect consumers who use open banking. All TPPs have to be approved by the regulator before they can appear on the Open Banking Directory.

Open banking does not mean handing over passwords. Software called APIs (Application Programming Interfaces) will be used to share customer information securely. It doesn’t allow direct access to a bank account, it simply consents to banks releasing certain information.

Each bank will offer a section on online banking called the Consent Store. It will name all companies that have consent to access account details, with an option to remove a firm. Consumers can check the Financial Services Register to see if a TPP is regulated.

Crucially, banks are still liable for a refund should a customer fall victim to fraud (unless there has been negligence). If the third party was at fault, the bank can recover the funds from them.

Find out how you could WIN a Furbo Dog Camera worth £199 when you enter our giveaway before September 3, 2018


Protect yourself from fraud

If you're interested in services offered by open banking, remain vigilant against potential fraudsters:

Listen to your instincts – if something feels wrong, then it's usually right to pause and question it.

Stay in control – have the confidence to refuse unusual requests for information.

Keep passwords to yourself – your bank or the police will never call you to ask for you full online banking password. Equally, nor will any utility companies or internet providers. The only person who should have knowledge of your passwords is you.

The national campaign “Take Five to Stop Fraud” was launched in October 2017 to help customers protect themselves from fraud. It's focused on helping consumers recognise scams, and to confidently challenge any requests for their personal or financial details by remembering the phrase: ‘My money? My info? I don’t think so’.

Visit the Take Five website to find out more about preventing fraud. 

Try 12 issues of Saga Magazine for just £12

Subscribe today for just £12 for 12 issues...






The opinions expressed are those of the author and are not held by Saga unless specifically stated.

The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.