Open banking payments revolution

by May 1, 2018Financial Planning, Resources

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Banking has been digitised, re-regulated, technologised and invaded by new entrants.
Open banking will deliver remarkable changes in both the way you move money around,
and in the way you store and access information about your money.
It promises to revolutionise how you manage this important resource,
bringing you a step closer to personal and financial freedom.

Banking revolutions

Open banking is about to deliver the next big revolution in personal and small business banking.

Perhaps you already take for granted the preceding revolutions in personal banking. Go back 17 years to the turn of the century. Most payments then were by written cheque. Yes, you had the hole in the wall and it gave you money on the back of your card. It might even provide you with a balance and your last five transactions. In contrast you needed a paper statement to find out the exact state of your finances

That’s all changed. Today banking has been well and truly digitised, re-regulated, technologized and become a battleground for new entrants. This has delivered remarkable changes in the way we move money around as well as in the way we store and access information about our money.

With online banking you can move money at the click of a mouse or swipe of a finger. PayPal enables secure transactions across businesses and continents. Money transfer services handle your cash transfers to friends, family or businesses in any currency. Apps like MoneyWiz can log in to your bank and credit card accounts, extract the information and regurgitate it in a consolidated statement of income and expenditure tracked against your budgets.

Yes, we now have more control over our personal cash. However, the revolution is only just beginning.

Open Banking

Open Banking has now arrived in the UK. You can now authorise your bank or building society to share your account information with selected, regulated Third Party Providers (TPPs).

You may already do this in a different form. MoneyWiz, for instance, asks you to provide them with your account details, password and PIN so they can log in to your account as if they were you to read your transaction details.

Open banking works through an API so you don’t reveal your password or PIN. Instead, your authorise your TPP to access your data or act on your behalf. The bank then confirms that authorisation with you.

Open banking is billed as ‘the power to revolutionise the way we move, manage and make more of our money.’

Innovative apps

The innovators are now moving fast into the personal finance field. What is interesting is that most of them are not banks (although they will be authorised by the Financial Conduct Authority or European equivalent).

One app I use consolidates all my accounts and cards into a single app, enabling me to see the exact state of my finances at any time on my phone, tablet or desktop. It shows me how much has come in and gone out, and compares the figures to my budgets.

Others help you save by extracting surplus income after expenses and transferring it straight to a savings account.  Yet another uses AI to answer questions sent by text about your finances.

Personal finance and banking is a fast changing world. If 2010 looked very different from 2000, then 2020 will look even more different from 2010. As we constantly say, your money is one of your most important resources. The coming developments will make it much easier to manage and control.

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