Changes to personal and business banking in the UK are already being rolled out ahead of the 1 March 2020 deadline.

Open Banking is a series of UK reforms which focus on how banks handle your financial information.

UK’s biggest banks including HSBC, Barclays, RBS, Santander, Bank of Ireland, Allied Irish Bank, Danske, Lloyds and Nationwide will have to make access to data much more customer friendly. It forces the banks to release data to third parties you are using, such as Quickbooks, Xero or FreeAgent, in a much more secure and easy way – without the need to share your login details.

Instead of sharing your password with a third party, you will be able to nominate third parties that you would like to have access to your financial records and just as easily withdraw your consent at any time.

Money saving solution

Along with cloud based accountancy softwares, Open Banking also opens an opportunity to give limited access to your finances to companies which focus on helping you save money on bills – such us bank account charges, energy or mobile phone bills. They will be able to notify you quickly if a better deal becomes available, based on your recent bill payment.

How will it work in practice?

Your third party service providers, such as cloud based accountancy softwares, will send you a request to access your financial records and give you access to the full package of their services, helpful with cash flow forecasts and tracking late payments. Once you authorise, they will send a request to your bank which will then put it up for your approval via your online banking account or mobile banking app. You can withdraw your consent via your bank at any time if you wish to. Just be aware that some of the features of your accountancy software will become unavailable.

The great benefit to this is that the third party will only have access to the essential details they need to provide the service rather than your full account settings. For example, if you only authorise them to have a view of your current account, they will not be able to see details of any credit cards associated with your account.

Check before you tick

You should only give access to companies which are authorized under the new PSD2 regulations. These companies are regulated by the Financial Conduct Authority (FCA) or another European regulator. Once registered, they appear on the FCA’s Register, and/or the Open Banking Directory. It’s certainly worth checking that they are on the list before you share your financial details with them.

Find them here: FCA Register:

Open Banking Directory:

The deadline for banks has been extended by 6 months to allow for additions to this reform, but they must all comply and have extra security measures in place by 1 March 2020. The new regulations don’t end on the major banks, providers of credit cards, digital wallets, and prepaid cards will also be required by the CMA to offer Open Banking.

If you would like our help with finding out more about cloud based accountancy software, please don’t hesitate to contact Ivybridge Accountants in the New Year to get your 2020 off to a good start.