In the retail banking world, Open Banking is transforming the way customers communicate financial information to third parties by securely sharing their account data. Now it’s bringing the same step change to the way businesses apply for funding.
What is Open Banking?
Open Banking is a secure standard that allows you to share your financial information with regulated providers. Most importantly, you stay in control: you choose what to share, and with whom. You never share your login details, so your accounts remain protected at all times.
Regulated providers are already using Open Banking to offer useful services, including budgeting services and collating account information from different providers. Using Open Banking means you can access completely tailored information. For example, results from price comparison sites will be based on your actual spend, not guesswork and applying for a business loan will be much quicker and easier.
Ultimately, Open Banking has the ability to transform the way we handle and manage money as individuals and businesses.
Is Open Banking safe?
Absolutely. You choose which services you use, which providers can access your information, and how long they can access it for. You’ll never be asked to share your login details or password with anyone. This means you stay in control at all times.
There is a simple rule: only share your data with authorised companies. You can check this on the FCA Register or the Open Banking Directory.
How does it work?
You can share your data for any payment account you hold. This could be a current account, a credit card, a prepaid card or savings account. Open Banking rules only apply to accounts that can be accessed online.
The entire Open Banking service works through APIs – that’s application programming interfaces. They make it possible for a company’s software to access information from the software at another company. For example, several apps use the Google Maps API to provide directions, rather than building that capability from scratch.
Once a bank makes its API available, data can be securely shared without you needing to reveal your passwords or login information. Importantly, it lets new financial services providers compete with the big players on a completely level playing field. For example, you might choose a current account from Big Global Bank Co, but an overdraft from Lean Finance PLC.
For consumers, this is great news.
How does it help when applying for finance?
Thanks to Open Banking, applying for business finance will be simpler and faster than ever before. When providers can access your transaction history at the click of a button there is instant trust, and application admin is completed in a flash. No more hunting around for six months of business bank statements.
With online accounting software, you can also give providers quick access to extra information like cash flow, profit and loss and annual accounts. Which means they get a full picture of your business finances – making it increasingly possible to get instant acceptance from authorised funding providers.
How we help
Finpoint is free to use. We’re 100% transparent about fees and rates, and give you access to the UK’s largest panel of business lenders. We’re also 100% independent. Our only interest is in making sure you get the right funding option for your business need.
Want to know more? Speak to us about funding.