This weekend, the Open Banking 'revolution' will kick off across the UK, with the biggest banks all committed to offering online systems that allow consumers to easily see all their money-related products in one place – if they opt in.
Open Banking is an initiative from the Competition and Markets Authority that is designed to increase competition across banks and building societies. The idea is that by putting all your financial information – your savings accounts, credit cards, loans, pension, etc. – together in one place, it's easier to manage your money.
What's more, you should be able to see what you're missing out on as well as what you've got, making it easier for consumers to switch to a more competitive current account or energy provider, for instance. In short, the initiative would take some of the legwork out of comparing finance products and make it easier to see what you are missing out on.
This is something that should be lauded, as the below table shows just how hard it can be to choose between different current account benefits, for instance, and how much you could be missing out on right now if your account doesn't offer incentives.
|Selection of accounts||Account||Cashback||Benefits||Cost to borrow £300 for 15 days|
|Switching incentive||HSBC Advance||£150 upfront then £50 after 12 months||Access to discounts and freebies online; 5% regular saver||Six months free overdraft, thereafter £2.20 (17.9% EAR)|
|Spend and save||TSB Classic Plus||£10 per month*||3% credit interest on balances up to £1,500||£6 pm then £2.24 in interest|
|Overdraft usage||first direct 1st Account**||£100 for switching; earn cashback with selected retailers||5% regular saver offered exclusively to account holders||First £250 fee free; £0.33 in interest (15.9%EAR)|
|*To receive £10 you must have two direct debits and make 20 card payments a month. **£10pm fee unless account funded by £1,000 or if an existing relationship is held. Fee waived for the first six months.|
As our finance expert, Rachel Springall, points out, some consumers may be concerned that their personal information could become compromised if it's shared so widely. She reassures us that "Open Banking was set up to create software and security systems that comply with the data security standards and protect any information. Data is to remain encrypted and any usage of information is tracked." Additionally, companies using Open Banking must be authorised by the Financial Conduct Authority, which means they'll be closely monitored.
If you're still not comfortable with the idea, know that "Consumers would need to give companies their permission to access any data and then expressly authorise the bank or building society to supply it," adds Rachel. So, no data can be shared without your express permission.
However, the benefits of sharing could very well outweigh the concerns. "Access to such valuable banking information could help speed up and simplify the process of getting approved for finance," Rachel states. "In addition, associated debt management tools could provide recommendations of a better current account with lower charges, based on someone's specific circumstances.
"Another example of how the data could be used is for those consumers looking to save money for a specific goal who feel that they don't have enough disposable income. Sharing their data with a budgeting app could uncover some unnecessary purchases and work out where they can save money."
That said, it's currently only the biggest banks that are implementing their own Application Programming Interface, and it might be a while before the challenger brands get on board. This is especially relevant for the savings market, as the best rates are currently still coming from the smaller banks and building societies.
You don't have to wait for a fancy online interface to review your spending habits. Have a look at our current account Best Buys to see if you can get a better deal, or compare broadband providers to see what you could save there.
Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.