With most of us going paperless in this digital world, and internet and mobile banking making it easier for us all to manage our accounts, savings and payments, it’s no surprise that these banking changes will allow third-party businesses to access customers financial information, providing the customer gives permission.
However, it’s not all scary, there are benefits for letting third parties have access to your financial position. For instance, being offered better deals on mortgages, loans, cheaper utility bills, broadband, etc. Allowing these companies to analyse your spending habits can help you secure better deals.
Open banking shows a shift in the balance of power, it provides you, the customer, more control over your data and makes it easier for companies to offer new and more affordable services/products.
The advantage for mortgage providers is that with permission they can access the applicant’s financial data, reducing the need for producing printed bank statements, and mortgage approval decisions will be quicker.
The obvious concern for us all is security. We here in the news about data being hacked or lost and this concern is being taken seriously by the banks and others, hence this Open banking format is being rolled out in three stages.
Stage one was delivered in March 2017 with generic information being made available to bank customers, the next step was released in January 2018, with the bank releasing API’s (application program interfaces) which with customer’s permission allows third-party applications and companies to read their transaction history. The third stage is expected to come into operation Autumn this year.
Whilst the idea of open banking and your data being shared with other companies may sound a little concerning, the host of new regulations related to data and all companies that hold your data will be scrutinised to ensure they comply with all security regulations.
As digital services and online banking are more heavily used, the open banking system does offer various benefits if implemented correctly, and for house hunters, it should create a speedier process for getting mortgage decisions.