Open Banking is one of the most significant developments to have occurred in the financial world in recent times. Established in 2018, the Open Banking initiative has already changed the way that financial information is viewed and managed. But why is it so important? How can you benefit from Open Banking? Let’s find out.
What is Open Banking?
The Open Banking Initiative was established in 2018 and forced banks to create open interfaces to customer accounts that were previously closed. The overarching goal of the initiative is to make the process of sharing, retrieving, and presenting financial information less complicated.
Thanks to Open Banking, customers are now able to access, view, and even consolidate their accounts from multiple institutions using an authorised Third Party Provider (TPP). Providing you give your permission, all UK-regulated banks are now required to share financial data with you through Application Programming Interfaces (APIs).
Ultimately, Open Banking has been designed to help you get a better deal when it comes to your finances, and allows you to exert greater control over your money.
How can I benefit from Open Banking?
As mentioned previously, one of the most impressive aspects of Open Banking is that it has allowed customers to consolidate their accounts into one place. As all UK-regulated banks are required to participate in Open Banking, it has also opened up new doors for customers and provided you with better deals, a greater range of services, and even better rates from lenders.
Although the concept of Open Banking is still relatively new, the process is entirely safe. Open Banking is regulated by the Financial Conduct Authority and puts you in charge of how your data is managed. While banks are required to participate in the Open Banking Initiative, you can opt-out if you choose. Again, it’s all about providing you with more control over your financial information.
Open Banking is also a potentially beneficial tool for anyone looking to borrow money. Traditionally, lenders have relied solely on your credit score when deciding whether or not to approve your application. Thanks to Open Banking, lenders are now able to assess the real-life financial situation of each applicant prior to deciding whether to approve a loan.
At Koyo, we utilise Open Banking through TrueLayer, a leader in Open Banking regulated by the FCA. Accessing real and accurate financial data allows us to consider your application based upon a broader picture of your financial circumstances, rather than just what a third party credit agency says about you.
Why is Open Banking such a big deal?
Open Banking is such a big deal because it has transformed the way that financial information is shared, accessed, and managed. It gives individuals much more control over their finances and provides every customer with a much broader range of services and options when it comes to managing money.
While it’s still a relatively new initiative, Open Banking has already helped people take charge of their finances and access services that they may not have been aware of previously.
At Koyo Loans, we’re proud to be utilising Open Banking technology to make finance fairer to our customers. Make use of our loan calculator to find out how much you could potentially borrow, or feel free to get in touch with us if you would like more information about our Open Banking loans. 24.9% APR Representative.