Open banking in the UK is still a relatively novel concept, but growing use is driven by functionality and ease of use for customers. The UK has become the global leader of open banking use, as it already has implemented standards since 2018.
The evolution of open banking in the UK
Open banking in the UK was first adopted by challenger banks that evolved faster and offered progressive solutions to their clients. Major banks in the UK are currently trying to close the gap between their services and the services of challenger banks to better meet the needs of the public and businesses.
Major UK banks are being forced to pursue the ever-evolving and constantly growing banking startups that benefit from new technologies. Nowadays customers demand high security, ease of use and quick digital advancements. Major banks have had to up their game to gain ground against challenger banks.
The advantages of using open banking
The main purpose of having open banking in the UK is to have a system that mandates banks to open up their application programming interfaces (API’s) (read more: https://nordigen.com/en/blog/open-banking-uk/). In turn, third parties can then develop new apps and services by integrating with these APIs through the internet.
Through open banking in the UK, consumers can share their financial data with providers securely – and only with consent. When banks open their APIs, third party developers can create apps or services that help evaluate your credit score with precise accuracy, and easily reflect your financial circumstances. Consequently, such access can help safeguard the financially vulnerable and promote more responsible decision-making by both the finance provider and the customer. Another great benefit is that open banking allows you to bring all of your financial information together in one place, with the benefit of high security and avoiding the risk of leaking your sensitive information.
Why is the UK the leader of open banking?
The UK got a head start in the open banking game because it put the consumer’s needs at the forefront and decided to do it in a secure way. Because of this, customers do not need to share their banking passwords with third parties, and the providers can access the required information using open banking APIs. Additionally, consumers were granted the opportunity to check who has access to their financial information and revoke their permissions at any point.
The steady growth of open banking in the UK is undeniable and will continue to rise. Open banking is on the verge of a revolution that will eventually bring open finance to the forefront, with a focus more on the user experience and comfort.