What is Open Banking?
Open Banking is a broad term for a set of banking APIs that allow third party companies to securely get access to a consumer's data — with permission, of course.
The term itself — Open Banking — is in reference to the fact that banking data is now 'open', and not constrained just to the bank's private databases.
How it works
There's an incredibly long and technical answer, however there are better places on the web to learn every detail (link to one of our favourites).
The short answer is this:
- There is an API that connects from the banks to intermediaries, such as TrueLayer.
- Once this connection is ready, users can be prompted to give authorisation for that 3rd party - such as Movem - to be sent their banking data.
- The consumer gives permission, and their bank will send some data to that company.
- The company can then use that data to offer better products, quotes, or something even better; like complete an instant reference.
Reliability of data
The beauty of Open Banking is that the data comes directly from the banks themselves. This means the transactions we see are reliable, and we can say with confidence that they actually happened.
This is a real benefit over the traditional methods. You don't need to worry about forged PDFs or fake employers. You know they get paid. It's then our job to analyse these payments to verify their income. 👨🔬
All 9 of the UK high street banks have been forced to support Open Banking.
However, even better than that, is that we use other third party providers — such as Yodlee — to give us broader access. We can view, analyse and contextualise data from hundreds of banks, from all over the world.