Five Benefits of Open Banking

Five Benefits of Open Banking

Welcome to VibePay, a game changing payments app that is built using open banking technology.

In this post you can join me, Jay Shepherd as we take a look at five benefits open banking offers. Some of which our app is already utilising and some which we will explore in the future!

So, what is Open Banking?

In the spirit of free-market enterprise, the UK’s Competitions and Markets Authority determined that large banks overshadowed small and medium-sized banks.

They created Open Banking standards to make it easier for individuals, small and medium-sized businesses to access more personal finance tools.

Generally, Open Banking refers to a set of policies allowing third parties access to your banking information. Before you panic, they only gain entry through your explicit permission.

In turn, they can access your transaction and balances, and even initiate payments on your behalf.

It was designed with privacy and security in mind, so you are always in control. Let’s break this down into more detail.

Open Banking Access

Open Banking can streamline access to your accounts:

● Deposit, savings, cheque, debit card and personal accounts

● Retirement, pensioner, investment, trust, and cash management accounts

● GST, tax, and foreign currency accounts

● Mortgage, asset, personal, and business lines of credit and loans

● Credit and charge cards

Complete Snapshot of Your Finances

Open Banking data brings all of your banking information to one place.

If you have multiple bank, credit, or investment accounts, allowing an Open Banking partner to collect that info on your behalf makes it a lot easier to work with that data.

When you have a total overview, you can see where you need to move money to and which bills you need to pay immediately. The decision process is faster and simpler with a complete picture.

Easier Budgeting

Budgeting software like Quicken or YNAB (You Need A Budget) streamlines the data input process by automatically pulling your account information. It provides detailed and graphic insights, so you can see where your money is going, especially if you primarily spend it using plastic.

Once you know where your money goes each month, you can create an effective budget to reach your financial goals.

While you receive the same raw data, Open Banking partners offer more personalised insights to save you money.

Suppose you want to work with a financial advisor. In the past, you would FedEx mountains of physical documents to her, or risk sending sensitive personal information over insecure digital networks. With Open Banking, you can give her access to your information with the flick of a switch.

She can immediately get a full picture of your financial life and help you identify where you can trim your budget, reallocate funds to your short or long term goals, or beef up your savings. You can even give her permission to initiate transactions on your behalf.

When you finish working together, you can revoke her access. It’s as simple as that.

Robust Security

Open Banking never requires you to enter your login information for a third party, so they never ask for it. On the other hand, many apps and services require you to enter that information manually, potentially risking security breaches.

It works similarly to giving Facebook permissions to access your other accounts like Twitter. Likewise, in your security access, you can revoke Facebook’s access to other accounts.

With Open Banking, you can provide third parties access to your account information to pay bills on your behalf.

The only companies with permission to access your data are those registered with the Financial Conduct Authority. The FCA makes that list public and keeps it up to date.

Monitoring your account activity and identity security is a snap with Open Banking.

Improved Credit Scores

Traditionally, if you want to apply for credit or a loan, you would have to go to a central bank because they are the only ones with access to information about you.

Instead, Open Banking sets the stage so you can permit any bank or account to access any information you choose. Consequently, your offers and recommendations are more personalised and accurately reflect your financial profile.

Personalised Banking Services

Open Banking makes it simple to change linked bank accounts or service providers. In the past, the bank may have required you to make a personal appearance and sign off on the changes. Instead, you can change the account flows digitally in seconds.

On a different note, Open Banking can allow you to work with overseas financial products that ordinarily wouldn’t be an option.

My Take on Open Banking

Open Banking is a new paradigm for the banking industry. It creates a new sense of freedom and empowerment so consumers can make the most informed financial decisions.

Armed with rich data, you can quickly react to your financial needs and transfer money or send money on a moment’s notice.

It gives you access to new banking options you wouldn’t ordinarily discover either because they’re smaller institutions or don’t typically work with your market.

If you share your Open Banking information with a monitoring service, they can act as an early warning system if your spending habits change or your debt-to-income ratio shifts.

Are you a business?

Open banking is still relatively new, but do not let that get in the way of streamlining your business. Take a look at our VibePay business page and get in contact to discuss how open banking can transform your business.

Share your ideas 📣

We love feedback and suggestions from our users! Visit the Community Forum and start a discussion and share ideas with other users!

Install or Update VibePay 📲

To install or make sure you are running the latest and greatest version of VibePay you can follow the links below;

VibePay on iOS - App Store

VibePay on Android - Play Store