Thanks to a host of annoying TV commercials, we’ve all heard of comparison websites. These are great when we’re looking for things like car insurance. But are there additional security risks when comparing our banking, or is this the only solution to help us get the best deals?
A recent BBC article explored a banking technology revolution. The CMA (Competition & Markets Authority) want to introduce new apps that allow customers to see which banks offer the best for their requirements.
As paper bank statements are becoming redundant, online data is the primary source of banking history for personal and business accounts. Online banking is hugely convenient; we can access our balance and process payments on the go, rather than visiting a cash machine. I love this leap in technology and I use online banking all the time, especially from my phone!
[inlinetweet prefix=”” tweeter=”” suffix=””]Society has evolved to expect everything to be instant and at our fingertips.[/inlinetweet] This need for instant gratification is something many sectors have had to adapt to. This could be what the CMA are aiming to do. So let’s find out a little more about Open Banking…
It all sounds great, right? We are already allowing well known companies to use APIs, the findings are tailored to our banking habits and the CMA claims this information is shared securely. Not to mention all the other benefits, like avoiding overdraft charges and managing cash flow. It is also great for new and smaller banks, currently older banks have the advantage. The CMA aim for the Open Banking Programme to make banks ‘work harder for their customers’.
“At the moment only 3% of personal and 4% of business customers switch to a different bank in any year. This is despite, for example, personal customers in Great Britain being able to save £92 on average per year by switching provider, with savings of around £80 a year on average available for small businesses.” (www.gov.uk)
Just like comparison sites – we love a system that will do the work for us and give the best deal suited to us. But the BCC (British Chambers of Commerce) point out an important negative to consider with Open Banking – sharing data.
Banking is something we are very private about and rightly so. We trust our banks to keep the majority of our money secure. Would Open Banking decrease this trust, as we would lose a sense of control when it comes to who is accessing our data?
It’s estimated that this package will not be put into place with all elements until the summer of 2018. So, why hasn’t the CMA’s idea been implemented sooner? Banks will need to adjust to a common open standard to speed up the process. Change is always a risk, but in this case it may pay off for us as individuals. We fear sharing personal information freely, especially our financial information. But without sharing data we may never switch our banks and will carry on not necessarily getting the best deals possible.
Bank services, prices, service quality and customer usage – this is the information that will be shared with third-party app providers. Although before this data is shared, individual customers will have to give their consent. Is this much different to sharing our personal information with Uber‘s APIs or filling out our details on a comparison website?
It could be that this is the only option for modern society. Civilisation craves digital platforms for everything in everyday life, the CMA’s remedy may just be the best solution for our individual and business banking.
What do you think about Open Banking? Share your thoughts with us on Twitter.