Essentially, the concept of Open Banking pertains to a series of reforms to the rules which govern how banks deal with customer information. Admittedly, that doesn’t sound too exciting. However, these reforms – which were called for by UK watchdog the Competition and Markets Authority (CMA) – are specifically designed to create more competition in the banking industry, which, in turn, should lead to more and better products being created to help consumers manage their money.
How will this happen? Because the Open Banking initiative means that all UK-regulated banks are now forced to let you share your financial data – such as your spending habits, regular payments, and companies you buy from – with authorised third-party financial services providers.
In plain English, Open Banking basically means that developers of budgeting and other personal finance web and mobile apps are now able to essentially ‘plug in’ to your current account data in a secure and standardised way – provided, of course, you give them permission to do so.
Why Is Open Banking Important?
As well as promoting greater competition, Open Banking – in combination with the EU’s new PSD2 directive – is also bringing banking into the 21st Century.
Historically, when it comes to our personal finances, we have pretty much always had no option but to interface almost exclusively with our bank. We finish school, open a bank account, get a job, fill the account with the money we earn, from which we then pay for our groceries, luxuries and bills. Eventually, we might need a loan, mortgage, or other financial product, and so we go to our bank – and that’s the end of the story.
However, every time we use our bank accounts – even when just buying a sandwich for lunch, or fuel at the petrol station – we generate data, which, until January 13th 2018, was owned by the bank.
(Image source: o3bank.com)
But with the introduction of Open Banking, the data you generate is now owned by you. This means that it’s up to you to decide if you want to share that data – and your bank is now mandated to provide any authorised third-party access to your data, should you give them permission to do so.
The result is that these third parties now have access to information that was previously only available to your bank, and can thereby offer consumers greater choice on where and how they manage their money with innovative and competitive products.
For example, you could connect your bank account to an app that would analyse your spending and recommend a new product, such as a credit card or savings account, which could save you money. Or, you might sign up with an account aggregation provider, which will enable all of your accounts from multiple banks to be displayed in one place, giving you a better overview of your finances.
In addition, by sharing your personal financial information with companies other than your bank, opportunities will be opened up to get better deals on things like mortgages, overdrafts, insurance, energy, and broadband deals, and much more besides.
As Helen Saxon, Chief Money Analyst at MoneySavingExpert.com, puts it: “The idea of ‘Open Banking’ is that it opens up data on your banking transactions. You’ll be able to share it with whoever you wish, the idea being that if companies know what you’re spending, they’ll be able to analyse the data and guide you to better deals, or better ways you can use your money.”
Are there Security Risks to Open Banking?
First thing’s first with regards to Open Banking security – you don’t have to share any of your personal financial data if you don’t want to.
Banks can ONLY share your data if you give express permission to the third party provider to have access to it. As such, each provider will ask for your consent when you sign up to their services. What happens next is that the provider will send a request to your bank, and your bank will then process the request and share your details.
The crucial thing for consumers is to always ensure that the provider is FCA authorised – and you can check whether they are or not on the FCA Register.
As long as they are authorised, providers will only be able to access the data needed for the service you’ve signed up to. For instance, if you’ve given your consent for a company to take a look at your current account with one bank, that company won’t be able to look at the credit card you also hold with that bank, unless you give your express permission.
All providers are of course legally obligated to comply with data protection rules, including the EU’s new General Data Protection Regulation (GDPR) legislation that’s coming into force in May 2018. Under GDPR, the provider will have to tell you exactly which data it will use, how long for, and what it will do with it before you sign up and give permission for it to do anything.
Essentially, if you don’t want to opt-in to any of the new services that Open Banking brings to fruition, you don’t have to.
Changing the Payment Landscape
Open Banking will usher in a more competitive financial services landscape, and one area that will be affected is payments.
Today, consumers need to be provided with the ability to pay for goods and services using whatever source of funds they want to use, and enjoy a consistent payment experience while doing so – no matter what they’re paying for, nor how or where they’re paying for it.
This is the world of polymorphic payments, another great benefit of Open Banking where every retailer accepts whatever the user wants to pay with, and the resulting method of payment is secure.
And this is precisely what the Da Vinci Choice card has been designed to offer.
The Da Vinci Choice card is the world’s first polymorphic payment ready universal card, designed to deliver a secure and consistent payment experience for consumers, regardless of how they fund their purchases either in-store, online, or over the telephone.
This is made possible by the Da Vinci Choice card allowing users to link up to eight of their existing funding cards to it, any of which can then be used to simultaneously fund the Da Vinci Choice card as it’s used to withdraw cash and make purchases wherever Mastercard® is accepted.
The Da Vinci Choice card is also loaded with enhanced personal protection and payment security features which make it impossible to copy or clone, as no one is able to steal your card details from it. Instead, the Da Vinci Choice card generates one-time PINs and security codes for use when making purchases. These codes appear on the device’s eInk display screen, once users have punched their secret four-digit Da Vinci PIN into the back of the Da Vinci Choice card itself using the numerical touch keypad.
The Da Vinci Choice card is the payment card of the future.
Open Banking is set to change the financial landscape forever. At first, it might seem like not much is happening – but, as time goes on and more third party providers of innovative new financial products become FCA authorised, brand new markets will undoubtedly be created as whole swathes of new products emerge that have a significant impact on the lives of consumers.
As Open Banking shakes up the world of finance, the Da Vinci Choice card is here to deliver huge benefits, greater choice for payments, and ultra-convenience for consumers – precisely what the initiative has been designed to enable.Launching in 2018, enjoy the benefits of Open Banking and register for your Da Vinci Choice card today.