21 September 2017

What is Open Banking?

Open Banking is an initiative led by the UK's Competition and Markets Authority (CMA). It's intended to create more competition in the banking industry and to encourage better services and more innovation to improve your banking experience. The idea is to provide a new way for new entrants and online service providers to access your bank account (provided you have registered for Internet Banking) and offer a range of online services, for example personalised financial products.

There's a lot of support for these reforms and it’s coming from consumer groups, new and established banking institutions, building societies including Nationwide, as well as financial technology (fintech) service developers.

People that want to take advantage of this initiative can expect to benefit from having access to new products and services that could make managing their money even easier.

New tools for managing money

Imagine, for example, that an organisation develops an app that monitors your spending and you let it make payments on your behalf. It could then monitor your Nationwide current account and spot opportunities to save you money, such as clearing the balance on your credit card so you don't have to pay interest. So long as you say yes, that organisation could even make that payment for you.

In the future, Open Banking could improve your banking in ways that we haven't even been thought of yet.

But it's entirely up to you whether you choose to take advantage of it. It isn’t obligatory. Nationwide believes in giving members the freedom to share their banking information to benefit from new ways to manage their money. But it may not be for everybody.

For those that want to use it, the good news is that there are some important safeguards in place to keep your money and data safe.

The safeguards

Since March 2017, we and a number of banks have been building things called Application Programming Interfaces, or APIs, so that it is possible to share your bank account information. This will also allow third party developers of mobile and web applications to create new personalised services for you. Just as importantly, though, APIs are a secure and well-tested technology.

And there are these safeguards too:

  • All Third Party Providers (TPPs) have to be approved by the Financial Conduct Authority (FCA) before they can appear on the Open Banking Directory.
  • No TPPs can access your information without your say-so. Members need to give TPPs explicit consent to let them contact us in the first place.
  • When the TPP asks you to give them access to your financial information, you'll be redirected to our interface so you can identify yourself. When that happens, we run our own security checks. If the TPP is not on the Open Banking Directory, they don't pass go.

Our response

20 years ago we were the first UK financial services provider to offer internet banking. So using technology to help our members get more from their money has always been something we're passionate about.

We know our members value technology for the convenience it offers and therefore we will also be launching Open Banking services in the future.

In the meantime, we're focused on ensuring our members have the clear simple guidance they need to feel confident enough to take advantage of Open Banking if they want to.

And as Britain's biggest building society we have a special responsibility to do whatever's right for our members and to keep their data as secure as we do their money.

You can pop in to a branch or chat to our people about Open Banking because it’s important to provide that guidance face-to face as well as online. Because we know our members value that human touch too.

Find out how Open Banking might affect you

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