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Open banking and the opportunities for you

woman using online banking on mobile phone

The introduction of open banking is a great opportunity to put you in control of your money. At Interface Financial Planning we are set to take full advantage of open banking to enhance our client service and reduce their costs. This is a huge change to the way that your bank accounts operate, and it is important that you understand what it is and what it can do for you.

In a nutshell open banking has been introduced to provide access to your data so that you can analyse and improve your spending habits, help you to manage your budget, and save you money.

If you request it the banks must share your data with other regulated third-party providers. Up to now if you have accounts with different banks you have had to log on to each bank separately and getting an overview of your budget and spending habits has been difficult. As soon as open banking is fully implemented you will be able to view all of your accounts from one place and have a full overview of your spending. You do not have long to wait and everything is expected to be in place by the 14th of September 2019.

Another reason for its introduction was to promote competition amongst banks and sharing data will point you at different accounts or financial services that could better meet your needs and save you money.

The History: In October 2015 the UK used its influence in the European Parliament to get Europe to adopt an EU wide open banking standard, a revised Payment Services Directive, known as PSD2. In August 2016, the United Kingdom Competition and Markets Authority (CMA) issued a ruling that required the nine-biggest UK banks – HSBC, Barclays, RBS, Santander, Bank of Ireland, Allied Irish Bank, Danske Bank, Lloyds and Nationwide – to allow direct access to their data down to the level of account transactions. The new regulation came into force on January 13, 2018 and is set up by Open Banking Limited, a non-profit created especially for the task. Enforcement rests with the CMA and protection for consumers will be done by the banks (for payments) or the Information Commissioner’s Office (for data).

Intelliflo and The Personal Finance Portal

At Interface we use the personal finance portal provided by Intelliflo for all of our clients’ online accounts. Most of our clients have already linked their bank accounts to their Personal Finance Portal (PFP) account which enable them to have a complete view of their bank accounts, credit cards, and their investments from one place. When we prepare their lifetime cash flow model this information has already reduced our charges because account balances are brought into our system without any manual work. This has been achieved using Yodlee but this service will be soon be superseded by open banking. Intelliflo have applied to the FCA for their authorisation as a regulated third-party provider and as soon as they are authorised, they will make the switch. Intelliflo have decided to make this service free of charge for all users, so I recommend that if you haven’t done so already you make full use of it. After the change the clients who have linked their bank accounts using Yodlee will receive a message when they log in to their PFP account, to switch from Yodlee to open banking.

Up to know we have only received information about your bank balances and clients have had to provide their income and expenditure breakdown manually. The new system will automatically categorise your income and expenditure which will save you work, provide more accurate data, and allow us to provide more comprehensive advice. When we prepare your lifetime cash flow models these will be based on accurate real data and it can be updated in a few seconds. We are excited about being able to offer you an enhanced service and I hope that you are too,

In summary open banking and linking your accounts to your PFP account will provide:

Personal finance management – which will show you where your money is being spent and where it is coming from. It will help you analyse your fixed payments and your variable / discretionary spend, and it will help you to identify where you can save money, e.g. cut down on eating out, spend on clothing, etc.

A single view of all your bank accounts, credit cards, and investments in one place

Debt management tools – it will help to highlight better products to help you choose lower interest rates or help you choose lower overdraft charges.

Lifetime cash flow modelling – easy and cost-effective access to our lifetime cash flow modelling service with simple and regular updating whenever requested.

For further information take a look at the guide from Open Banking

 I appreciate that this month’s newsletter and blog is heavy reading, but I recommend that you to spend some time digesting it because this is the biggest change in banking for decades and it is important that you understand your opportunities for improving your financial planning. It will be in place by mid-September and we are here to help if you have any queries. If you need any help simply send us a secure message of arrange a phone call using our appointment link.

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