The follow article gives you an overview of what Open Banking is, what it means when it comes to using your bank accounts on Money Dashboard and as a directory of other relevant articles specific to Open Banking on Money Dashboard.
What is Open Banking?
Open Banking is a phased implementation of a new law (PSD2) that requires UK banks to provide technology so you can share your financial information with regulated businesses. This is via an ‘Open API’ - a channel that directly connects to your bank account using a third party service like Money Dashboard.
PSD2 is a new law that makes it easier for consumers to share their financial information. It means you will have greater control over your financial data and who it can be shared with. This will make it much easier for you to shop around & switch current account providers, or other financial products
Does Open Banking and PSD2 mean the same thing then?
As terms ‘Open Banking’ and ‘PSD2’ are sometimes used interchangeably, this can be confusing. It is probably best to describe ‘Open Banking’ as a tool that allows you to enjoy the benefits of PSD2, and 'PSD2' as a law that enshrines your right and protections to share your financial information.
So does a bank follow the PSD2 law even if they don't offer Open Banking API connections?
When a Bank or Application doesn't offer Open Banking, it does not mean they aren't following and complying with PSD2. A number of banks will provide their own non-Open Banking API solutions; e.g. Starling, and Monzo, and some apps like Money Dashboard will support these non-Open Banking APIs, as well as Open Banking and Credential Sharing. Done correctly, all of these methods support PSD2.
What does that mean for me when I am using Money Dashboard?
If your bank provider provides the Open Banking API connection, you will have the option to connect them to Money Dashboard through the Open Banking option.
You can read more about the benefits of having your bank accounts connected via Open Banking here.
Currently Open Banking API is in the phase implementation and only certain bank providers are required by law to enable it. As well, only certain types of accounts are available for connections as not all account types fall under the PSD2. For example, most savings accounts unless you are able to make payments directly to another third party account, will not have an Open Banking connection available.
Other relevant articles about Open Banking on Money Dashboard
More information about Open Banking
If you would like to find out more about Open Banking you might find the following external links useful:
Background to Open Banking:
Timelines of the PSD2:
Financial Conduct Authority: Account information and payment initiation services
Financial Data and Technology Association: Open Banking 2020 - 2030
Open Banking (Implementation Entity): News
Pwc: Open Banking will shape the future of UK retail and commercial banking
Wired: What is Open Banking and PSD2?