The benefits of open banking for you
Open banking was first introduced in the UK on the 13th of January 2018. You’ve been able to let third-party providers such as budgeting apps access your bank account data since then and you are protected when you do so – as long as the provider is authorised.
So what is Open Banking?
Open Banking is a series of reforms to how banks deal with your financial information, called for by competition watchdog the Competition and Markets Authority (CMA). It comes alongside a regulation with the snappy name ‘the second Payment Services Directive’ (PSD2), which also came into force on the 13th of January 2018.
In plain English, together they mean all UK-regulated banks have to let you share your financial data such as your spending habits, regular payments and companies you use (basically your bank, credit card or savings statements) with authorised providers offering budgeting apps, or other banks – as long as you give your permission.
Open banking is facilitated by APIs. APIs, or application program interfaces, are vital tools for businesses in all industries. The importance of APIs from a technical standpoint is that they allow the capabilities of one computer program to be used by another. They are a means by which two different programs are able to communicate.
The idea behind these changes is that they’ll bring more competition and innovation to financial services, which in turn is hoped to lead to more and better products to help manage your money.
For example, you could connect your bank account to an app that would analyse your spending and recommend a new product like a credit card or savings account to save you money, or sign up to a provider which displays all of your accounts with multiple banks in one place so you have a better overview of your finances.
At the time of writing this, there is a plethora of personal finance apps on the market. These apps are useful for analysing your income and expenditure, budgeting, cashflow planning, valuations, net worth summaries and Self Assessment Tax Return preparation.
Personally, I have been using Money Hub for a few years. I swear by it. I have many bank accounts, credit cards, savings, pensions, investments, businesses, properties and mortgages. I know I am unusual but Money Hub is an absolute godsend to me and what’s more it only costs £10 a year. Other personal finance apps include Money Dashboard and Money Info. Money Dashboard is a free app so it is more basic than Money Hub and Money Info. In my opinion, Money Info is the Rolls Royce of personal finance apps but it is only available through Independent Financial Advisers currently so you would have to be a client first.
So if you would like advice on which personal finance app is best for you why not get in touch with me? You know it makes sense.