Open banking brings such ease and simplicity to our relationship with you that it’s on a par with the innovative designs of the great man himself.
The facility isn’t universal yet, but it’s being rolled out gradually, and is sure to be a cornerstone of our financial life in years to come.
Open banking is all about convenience and efficiency. In a nutshell, it works like this: if you instruct your bank to set up open banking for you, they’ll make your financial details available to any third party you specify.
That third party could be ourselves, as your financial adviser, to allow us to monitor and better understand your financial situation.
Open banking will allow you to see details of your various accounts in one place, so that you can check exactly how much you have (or owe) in your current account, other savings accounts, your mortgage account, and so on. In other words, you get to see your entire net worth at the touch of a button.
It’s important to remember that this is only possible with your express permission. Your bank can’t show your details to anyone without your say so.
Your data is also perfectly safe: providers you allow to see your details must rigidly adhere to the latest data protection legislation. They must keep you fully informed about which data they will use, for how long, and for what purpose. You get to approve all of this even before the arrangement is set up.
These authorised third parties will be regulated by the Financial Conduct Authority (FCA) or another European regulator, and will appear on the FCA's Register, and/or the Open Banking Directory.
The main advantage of open banking is that, if you permit us to access your data, it eliminates the need for you to fill in forms detailing your financial situation and removes the need to keep us updated if your situation changes. All the info is there, in one place, and the possibility of errors or omissions is eliminated.
If you have your data on an excel spreadsheet, for example, you’d no longer have to update it - with open banking that can happen automatically.
It’s a clear ‘win win’ situation, for you and for us. It’s also the perfect solution for your beneficiaries.
If anything were to happen to you, we’d have the relevant information about your bank accounts at our fingertips, ready for your loved ones at the touch of a button.
In this way, open banking works perfectly with our ‘What I own and where I keep it’ document, which we shared with you last month. Having a singular document like this, with a list of everything that’s important to you in one place – from loan information to details of any holiday homes – makes it much easier for your next of kin.
You can also choose which aspects of your financial life you want to share. You can limit who sees what; for instance, you can authorise a provider to see your current account, but not your credit card account, even if it’s at the same bank.
Open banking isn’t just limited to sharing your banking details, however. It also facilitates payment services. You can use it to pay companies and retailers directly from your bank account, not via a card company such as Visa or Mastercard.
And it’s just the beginning. Open banking is still a relatively new concept, but many companies are now designing products that will use it to make our financial life easier.
Of course, we’re focussing here on how open banking can streamline your relationship with us, but it will have many other uses as well.
You could, for example, connect your bank account to an app that will monitor and analyse your spending and financial behaviour. Based on that, the app would then alert you to alternative bank accounts or products that would save you money or recommend a credit card better suited to your needs.
Now that open banking is with us, we’ll see financial services companies dream up many more services to exploit its full potential.
I’d compare it to the introduction of the iPad back in 2010. Now that the device itself is there, thousands of providers scrambled to design apps that would do it justice and exploit its potential.
Whether you opt to sign up for open banking or not, one thing is certain: open banking will completely revolutionise the way we manage our money in the future.
