Are you ready to embrace open banking?

Open banking regulations have been in effect since January 2018, as the UK’s implementation of the EU’s PSD2 revised payment service directive.

The objective is to put customers in control of their data, encourage competition and enable consumers and small and medium-sized business to save money. Customers can choose to participate and share their personal financial data with any company.

Isn’t sharing personal financial information too risky?

Secure application programming interfaces (APIs) allow information to be shared securely between different providers. Only organisations regulated by the Financial Conduct Authority or a European equivalent can take part, so consumers’ money is always protected.

What’s in it for consumers?

Consumers will easily be able to compare the costs and benefits of equivalent services offered by different providers. Initially, the focus is on banking, but in future they’ll be able to compare insurance, mobile phone, internet, utility and other services.

What does this mean for the major banks?

The open banking regulations were enacted by the Competition and Markets Authority. The nine largest banks and building societies have enrolled, allowing customers to compare benefits of savings accounts and credit services between these banks more easily. If you’re a bank, you’ll need to ensure your mobile app incorporates data from open APIs easily and allows customers to use it as a price and benefits comparison tool for services.

By embracing open banking, you’ll increase your customers’ trust in you as personal finance advisors. It’s important to communicate the benefits to them in an engaging and personalised way, remembering that customers will be attracted to it for different reasons.

Find out more about how our client HSBC is embracing open banking and how Profusion can support your organisation with customer communications.

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