Open Banking puts consumers at the forefront
Change has come to the banking sector. With the new Open Banking and PSD2 legislation, the power dynamic between banks and their customers is shifting for the first time in centuries.Under Open Banking and PSD2, customers now own their banking data. This means they have the power to share it with third parties such as other banks, products, and services, if they want to. This gives them:
1. Freedom of choice
With open banking, customers choose exactly what to do (or not to do) with their data and exactly who to share it with. They also have the power to revoke that consent. This will open up an entirely new landscape of business models.
It will become easier than ever for businesses to offer customers the most enticing personal offerings and deals. This will result in a unique ecosystem for each customer, a bespoke network of services and providers that meet their needs.
3. Security and privacy
Under open banking, financial data will be more secure than ever before. All banks, apps, companies and other third parties operating under open banking legislation will need to meet the absolute highest standards of privacy and security set by the Financial Conduct Authority and the Competent Authorities for each country.
The laws and tech behind the changes
Bringing open banking to life has relied on two new legal regulations and a key piece of technology to make the connections between banks and Third Party Providers.
The regulations:PSD2 (Payment Service Directory 2):
This European regulation aims to create a more integrated and efficient payments market, leveling the playing field for new players, including non-banks and other platforms.
CMA Order (Competition and Markets Authority Order):
Like PSD2, the CMA Order in the UK aims to increase competition, but it focuses more on customers in the retail banking sector. The CMA is implementing the necessary measures and reforms to create a more transparent and technology-driven relationship between financial institutions and their customers. Open Banking is one of these key measures.
Through PSD2 and according to the CMA’s reforms, Open Banking officially came into effect in the UK on January 13th, 2018. Together, these regulations ensure a standardised, secure way for financial institutions and services to connect to one another, share data, initiate and receive payments, and more.
The key technology: APIs
Setting up the secure connections between these institutes and services will be done through application programming interfaces (APIs). These pieces of software enable the exchange of information between other programs and authorise specific operations. Under Open Banking, banks are required to develop their own APIs and make them available to individuals and third parties to connect to. This will ensure secure access to the financial data.
Proven by our Yolt app, ready for the world
At Yolt, we were one of the first to embrace the principles of open banking to empower our users. The Yolt money management app offers options, freedom and customisation, so users can take control and make their money go further. This platform leverages the power of API integration to connect with major banks across Europe – including being the first to connect the UK CMA9 – and reliably serve its hundreds of thousands of users with 8 million API calls per week as of July 2019.
We are now making this technology available to other companies with Yolt Technology Services (YTS), allowing businesses to take advantage of the opportunities presented by open banking with a secure, proven technology partner at their side. The YTS API is built in a dynamic way, using the latest technology and the security standards of a major bank. The perfect technology for businesses wanting to stake their claim in the changing financial landscape.