In the coming months you’re going to hear much more about Open Banking. But what is it and how does it work?
In January 2018, new European legislation went live to give individuals and business greater visibility of their financial status. Catchily called the Second Payment Services Directive (PSD2), this new ruling unlocked access to the data held by financial institutions – giving consumers more of control of the data that their banks hold about them.
Essentially it means that if you, as a consumer of financial services, makes a request to your bank for the data that they hold on you and they must give it to you. The flow of information is often referred to as Open Banking. It’s a bit like a Freedom of Information Act for the financial world.
Open Banking provides you with the information to take control of your finances.
1 Data is King.
The benefit of Open Banking and the visibility of your financial information is that you get a more detailed view of how the financial market views you. This allows you to take control of your situation and shop around or manage your financial matters in the best way for you.
Your financial information, accessed through Open Banking with your bank, is used by Credit Passport to create your business credit score. Thanks to the real time ‘Open Banking’ data updates from your bank to the platform, your business credit score will automatically keep up to date and reflect your latest activities. Use your business credit score to demonstrate your business resilience and to grow your organisation.
2 Open Banking Providers are Highly Regulated, Controlled & Go Through A Rigorous Vetting Process
Before you call your bank to request your profile, you should know that only approved providers – like CRIF Realtime Ltd, the company behind Credit Passport – are authorised to share your information with you. The way PSD2 has been implemented in the UK is that only FCA approved organisations (Account Information Service Providers - AISPs) can handle these data requests. The Financial Conduct Authority (FCA) is the independent body responsible for auditing and quality assurance of any organisation using financial data. Their approval process is rigorous, so you can be assured that when you see the FCA accreditation it is an organisation you can trust to be secure. In fact we were one of the first six companies to be granted this license. You can view our accreditation here.
Neither you or any organisations authorised to use it can make changes to the raw data or your dashboard profile. So, you can be assured that it is safe and secure.
3 Open Banking is a Read-Only, Encrypted, Safe & Secure Financial Data Connection
When you go online in your bank app or website to manage your standard bank account typically you can access funds, transfer and all sorts of other activities. You can see in front of you when you make a change, in real time. When it comes to Open Banking, the information provided by the bank is like looking at your bank statements. It is read only and fully encrypted. Neither you or any organisations authorised to use it can make changes to the raw data or your dashboard profile. So, you can be assured that it is safe and secure.
At Credit Passport, currently we work with most major UK banks, and many of the smaller ones, to provide clients with their financial data via Open Banking. It’s with this data that we’re able to develop your business credit score - which is 100% free to discover. Sign up for free today and unlock your financial profile.