So Open Banking has arrived, and with it, the introduction of a variety of apps, all with an aim to aid you in using the newly formed rules to improve budgeting habits. The new rules make it imperative for banks to share your data with third parties. This includes spending patterns and transactional history. The result, a change in the way you manage your finances.
Due to the access third parties have to your current account, they are able to analyse the amount you are able to save each month. They can then transfer this amount automatically into your savings account. Further to this, they can view how often you enter the overdrawn stage, and can recommend an account that would better suit your needs. For example an account with lower overdraft charges.
Open Banking allows you to keep track of all your money, across different accounts via a singular website. Open Banking should now encourage more individuals to switch bank accounts as sharing your financial data with new banks is made easier.
It is not all good news…
These new rules can attract fraudsters, with these criminals setting up dodgy apps and websites, with the aim of obtaining personal banking details under the umbrella of open banking. The main worry is stemming from the fear of letting an app access data, and being unsure of who will reimburse for the wrongdoing if something does occur.
Before open banking, the blame would fall on the bank, meaning they would compensate you for the damage caused. However, individuals will now be handing out details to fin-tech firms that have developed apps. Putting their details at risk themselves. Given fin-tech firms are of a much smaller scale than those tech companies that have already been hacked, it is an assumption that they may be vulnerable to hacking too. Further to this, it is questionable as to whether small technology companies would be able to cover potential losses incurred if a hack occurred.
Many tech firms are taking out insurance policies to cover themselves in case of a data breach, as they now need to be regulated in order to use open banking. However, according to a survey by Accenture, many individuals are still concerned, saying they would not share financial data with third parties.
Many banks such as Santander, HSBC, Nationwide and Barclays have all received an extension to the deadline of complying with open banking, so if you are wanting to adopt this new way of banking, then you may have to wait a little while longer!
Consumers will need to be vigilant about potential phishing attacks. Phishing is where cyber-crooks use confidence tricks to reel in people’s account passwords. For example, they might act as a high street bank in an email and suggest there are security concerns with a customer’s account. This way, victims are then persuaded to click on a link and verify their identity by entering account log-in details. Criminals can use those details to access a person’s account and remove funds. If banks believe an individual has been careless with passwords, they will not refund them. Nor will they help an employee who has been tricked into authorising a payment to a fraudster believing it to be the account of a genuine person or business.
For more information on phishing scams, read our recent Phishing Article.