You want your money to be safe. That's a given.
So the concept of an 'open' bank may seem a strange one.
Firstly, let's clarify... Open Banking doesn't mean that the banks will be throwing open the doors to their vaults 🔐 Instead banks are now obligated to let you share your account details with organisations that you choose.
Put simply, Open Banking (the UK application of the wider, European directive called PSD2) is technology designed for the modern 'mobile world'.
It provides a more secure and convenient way for you to share access to your financial information with organisations you choose.
With the rise of modern 'neobanks' (e.g. Monzo), we've seen that there's an alternative to the stuffy and old-fashioned world of traditional banking.
Open Banking will create even greater innovation, because the use of open-source technology means that third parties can compete on a level field with high-street banks. This ultimately means more choice for you!
Here at Plum, we think that the better options for those wanting to understand spending habits or take control of their finances has got to be a positive 💜
Is Open Banking secure and safe?
Whilst it's true that Open Banking means you can share account access with whoever you so wish, it should also help keep you safe from hackers 👮♀️
One significant benefit is that it allows third-party financial apps to utilise biometric security features built-in to modern smartphones.
This makes things more convenient for you, because you don't need to remember lengthy passwords! You can grant authorised providers read-only access to your data, but the normal data protection rules still apply.
Crucially, Open Banking means that if you share data with authorised providers, banks mustn't hold you liable for fraud (a scare tactic they'd threatened in order to try and maintain their monopoly over your details).
So long as you aren't deemed to have been 'grossly negligent', then it's your banks responsibility to rectify any instances of fraud by investigating with third parties you've authorised, if the bank suspects that they are at fault.
For many, the concept of allowing a third-party to access your bank account may still seem a little unsettling. But it's important to remember that these providers can't make changes to your account or move money unless you've granted them specific permission to do so.
Also, the fact that this technology will soon underpin all major UK financial institutions means that vast amounts of effort has already gone into eradicating any potential risks, ahead of the system going live.
Overall, we feel that greater transparency and an upsurge in money saving apps like Plum will far outweigh any potential concerns.
This technology paves the way for more of you to master your finances, and that always gets our Plums up! 👍Download Plum