Open Banking and its benefits explained

October 14, 2020
FinTech

Comprehensive rules known as the second Payment Services Directive 2 (PSD2) mean banks have to allow you to share your data with authorised providers. These rules are pushing towards being three years old. So, why were these Open Banking regulations put in place and how can it benefit you? More importantly, how safe is it?

First and foremost, security

As Open Banking becomes more wide spread, the biggest difficulty it faces is trust. Interestingly, Open Banking is just as secure as using your traditional online banking.

A critical aspect of Open Banking is your consent. For example, to give any app or company secure access to your data, you need to give your consent. After you consent, your data is encrypted and only companies that are regulated and trusted will be able to access the data via your bank. Moreover, your banks have an obligation to keep your data secure and protected.

Most importantly, when it comes to consent, you absolutely do not need to give consent if you don’t want to. Furthermore, if you give consent and then change your mind, you can withdraw your consent at any time. Moreover, access to your data will expire after 90 days. So, even if you were to forget who you gave access to, 90 days later that access would be revoked.

"Positive change is on its way to finance and it'll go beyond just digital banking."

Morgan Kidd

Founder & CEO

How Open Banking will benefit you

There are numerous benefits to leveraging Open Banking. Your banks (traditional & digital), utility providers, credit card providers and others are unlikely to recommend better competing products. However, third-party providers are able to recommend ways to optimise your finances and can offer you tailored deals, rewards and more.

Depending on the third-party provider you use, there can be a whole host of additional benefits. For example with CoinCoach, if you hold accounts and cards across multiple institutions and/or countries you will be able to centralise everything. As a result, you don’t just get an overview of the money you have but also gain insight into all of your finances, including cash transactions that can be entered manually. Additionally, applying for a loan, mortgage or even opening new accounts around the world will be effortless, with much of your information being pre-filled. Moreover, our Artificial Intelligence/Machine Learning analyses your application to help you optimise it for success. Finally, the process of making sure you have the ability to repay the bank can be handled seamlessly and securely through Open Banking.

Consequently, you’ll save time, energy, stress and money. Especially since CoinCoach is free. To learn more abut how we can offer this for free visit our About Us page and scroll down.

Ok, got it! But how do I connect to my bank(s)?

This is a question everyone asks when it comes to open banking. To get a little technical, Application Programming Interfaces are used, known as API’s.

What do API’s do? One of the core functionalities of API’s is security. They essentially allow an application to access certain internal functions of a program while not granting access to rest of the program/code. For example, apps like Uber may use Google Maps API to workout where you and your driver are.

So, how will this look in app? When you link accounts in CoinCoach we will connect via API’s. Firstly, you’ll be asked to choose which country your accounts are in and which banks you use. Next, within CoinCoach you’ll confirm that you’d like to give CoinCoach permission to centralise your data. Once this is done, you can sit back and relax while your data is centralised, analysed and visualised beautifully.

Open Banking, a Summary

Positive change is on its way to finance and it’ll go beyond just digital banking. This change will bring innovation, speed and efficiency to your finances. Additionally, you have complete control as to whether or not you want to use Open Banking via your ability to give or withdraw consent.

The competition that Open Banking brings could lead to the best financial services being in your hands. The reason for the Open Banking and PSD2 regulation is to increase competition and innovation after a painfully long period where financial institutions wouldn’t innovate. The future is looking bright!

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