What is open banking?

Zorica Lončar

Open banking is a relatively new financial service, so not everyone is aware of exactly what it is and how it works.

In this guide, we’ll aim to answer all of your questions about open banking. This includes safety concerns, the benefits of open banking and everything else you need to know. Plus, how you can use open banking with your Wise multi-currency account.

What is open banking?¹

Open banking is a service which lets you securely share your banking and other financial data with banks, third-party financial services and apps.

As long as you provide explicit permission, your bank can share things like your account details, savings statements and regular payments with authorised providers. For example, budgeting apps or cash flow management tools.

It’s part of regulatory reforms which came into force in 2018², which provided crucial protection for consumers.

The aim of open banking is to bring more innovation into financial services, so that products and apps can be connected to provide better experiences for consumers.

How does open banking work?

As a consumer, all you need to do to make use of open banking is to give your permission. You’ll be prompted to do this when you use a new service, such as a budgeting app, for example. However, you don’t have to share your data if you don’t want to.

Open banking uses Application Programming Interface (API) technology¹ to provide approved institutions with a quick and secure way to share your data.

The benefits of open banking

Open banking aims to offer the following advantages to consumers:

  • Access personalised financial services for your needs
  • More control over your finances
  • View all of your accounts and financial data in one place
  • Full regulation means greater data security.

Is open banking safe?

When banking and other financial data is being shared, it’s only natural to worry about security.

The good news is that open banking is fully regulated¹. Your data can only be shared between UK-regulated financial service providers, all of whom must comply with strict data protection rules.

And your data is only shared if you give your explicit consent. There’s no automatic opt-in - you have to agree for your data to be shared¹.

What types of accounts can be used for open banking?

Open banking can be used for any online or mobile payment accounts or services from authorised providers. For example³:

  • Personal and business current accounts
  • Credit cards
  • Budgeting, spending tracking and savings apps
  • Online e-money accounts.

You can see the full list of regulated providers here.

Which banks offer open banking?

Most of the UK’s largest banks and building societies use open banking, including Barclays, Bank of Scotland, HSBC, Lloyds Bank, NatWest and Santander³.

Plus, digital only banks including Starling Bank, Revolut and Monese³.

But the list of providers is growing - you can check if your bank is on it here.

Does open banking cost anything?

Open banking as a service doesn’t cost you anything as a consumer³. However, you may have to pay a subscription fee or other charges to use finance apps and other services.

Using open banking with Wise

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

It’s much quicker than setting up manual transfers, as Wise connects directly to your bank and all the payment details are pre-filled.

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

Join Wise today

Sources used for this article:

  1. Raisin - open banking explained
  2. Money Saving Expert- open banking
  3. Open Banking - FAQ

Sources checked on 01-06-2022.

This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from Wise Payments Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.

Money for here, there and everywhere

Find out more

Tips, news and updates for your location