Personal Finance Tips

Is open banking safe?

Zorica Lončar

10.06.22 (updated more than 1 year ago)

Read time 2 minutes

Open banking is a service that lets you share your banking and other financial data with banks, money apps and other providers.

It has many benefits, including giving you more control over your finances and the option to view all your accounts in one place. For example, you can use it to sign up for an app which tracks your savings or offers personalised budgeting tips.

But is open banking safe? In this guide, we’ll cover everything you need to know about safety and security with open banking. Plus, how you can use open banking with solutions like Wise.

How secure is open banking?

It’s only natural to have concerns about your financial data being shared by banks and third-party providers.

But the good news is that there are a number of measures in place to make sure consumers are protected. We’ll run through a few of these security features now.

FCA regulation

Open banking is fully regulated by the Financial Conduct Authority (FCA)¹. This means that only authorised providers can offer open banking services.

Before giving your permission for data to be shared, you can check up on the provider by searching the FCA Register or the Open Banking Directory.

Have a Wise multi-currency account? Wise is a regulated open banking provider, so you can use the service to make international transfers more convenient.

Data protection rules

Is your data safe with open banking? Yes, as all open banking providers have to comply with data protection rules¹. This includes new GDPR rules, so they must stipulate exactly what data will be used, what for and how long it’ll be used for.

Plus, the provider will only be able to access the data needed for the service you’ll be using¹. So for example, if you’ve connected your current account to a budgeting app, the provider would only be able to access your current account data. It won’t be able to access data on credit cards or other financial products you hold.

API technology¹

Open banking uses something called application programming interfacing (API) technology to securely share financial data between providers.

API technology is widely used by technology companies/services such as Google Maps, Uber and Facebook.

The Government’s Competition and Markets Authority (CMA) has a set of standards for banks and providers to follow when using APIs, along with lots of security measures to protect you and your data.

Opting in or out

The last important thing to know about open banking security is that you can opt in or out at any time².

It’s your choice whether to let providers share your data, and you’ll need to give explicit permission - you won’t be automatically opted in. Plus, you can withdraw your consent at any time, so that banks, apps or other services can no longer access your data. This puts you in full control.

Using open banking with Wise

Money transfer specialist Wise is regulated to use open banking. This means you can use it as an easy, convenient and fully secure way to pay for transfers from your Wise multi-currency account.

You’ll find it much quicker than setting up manual transfers. This is because Wise connects directly to your bank, and all payment details are pre-filled to save you time.

Find out more about paying for Wise transfers with open banking here.

Join Wise today

Sources used for this article:

Money Saving Expert - open banking
Open Banking - consumer security page

Sources checked on 06-06-2022.

*Please see terms of use and product availability for your region or visit Wise fees and pricing for the most up to date pricing and fee information.

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