Open Banking ‘revolution’ to challenge banks’ dominance

Shane Hickey at the Guardian: “This week sees the beginning of a quiet revolution in banking which some have championed as one of the greatest shake-ups in personal finance in years, while others have warned it could have serious implications for people’s private data.

It’s the start of a new series of rules concerning “open banking”, where customers will be able to share their personal financial information with companies other than their bank, opening up opportunities to get better deals on mortgages, overdrafts and comparing insurance and broadband deals.

For eager enthusiasts, it will revolutionise banking, make the system more competitive, and give consumers access to the best products for them.

For the more sceptical, among them consumer groups, it could cause problems with the security of previously private data…..

Financial data about how you spend your money, how often you are overdrawn and other details are currently held by your bank.

Under the new rules, the ownership of this data will essentially be transferred to the consumer, meaning that account holders will be able to give companies, other than their own bank, permission to access their details. Underlying this new regulation, which will spread across Europe this month, are EU rules that mean financial institutions must let customers share their data easily and securely. Extra measures are being taken in the UK to push through the changes, with the setting up of standards so data can be shared securely….

While consumers may feel empowered that their data is now in their own hands to do with as they please, with the potential to save money, it could also lead to unease, particularly when dealing with third parties that have brand names they might not recognise, says Shaw.

“One of the things to be mindful of is that consumers could find themselves in a complicated chain of providers. If you authorise one third party to access your money, and if there are potential losses, where does that fall?

“I think data regulators and financial regulators need to be really clear with consumers about how that is going to work. In order for consumers to really engage with this, they need to be confident that there are safeguards in place to protect them. There has been good progress on that.”…(More)”.