what is open banking?

How open
banking started

In October 2015, the European Parliament adopted a revised Payment Services Directive, known as PSD2. The new rules included aims to promote the development and use of innovative online and mobile payments through open banking. The directive came into force on January 13, 2018 and in the UK meant that the nine biggest UK banks - HSBC, Barclays, RBS, Santander, Bank of Ireland, Allied Irish Bank, Danske Bank, Lloyds and Nationwide – had to allow licensed startups direct access to their customers accounts via secure API’s (techie language that just means a way for two software systems to securely talk to each other!).

This means that companies such as Zap can harness Open Banking to create powerful services for their customers to help them move, manage and make more from their money.

What are the benefits of open banking?

Some opportunities that open banking strives for include:

  • Helping people to better transact, save, borrow,
    lend and invest their money
  • Reduce overdraft fees
  • Improve customer service
  • Increase your control of your financial data
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is opening banking right for you?

What are the benefits of open banking?

what is open banking?

Zap and Open Banking

Zap has used Open Banking to create a payment initiation service designed to help you pay and get paid quickly and easily by moving money directly from one bank account to another.

Instead of having to login to online banking and manually go through the payment process step-by-step, Zap sets up the payment for you so you just need to approve it in the Zap app. Once approved the money is moved to the recipients bank account in exactly the same way as a traditional online banking payment.

what is open banking?

Which banks use Open Banking?

Only the UK’s nine largest banks and building societies (also known as the CMA9) are required to make data available via Open Banking. They are:

Other UK banks and building societies can choose to take part in Open Banking, but aren’t required to. The Open Banking Implementation Entity lists the following additional banks and building societies as currently offering Open Banking:

  • Arbuthnot Latham & Co Limited
  • BFC Bank
  • C Hoare & Co
  • Clydesdale Bank
  • Contis
  • Coutts & Company
  • Coventry Building Society
  • Creation Financial Services
  • Cynergy Bank
  • Ghana International Bank
  • Yorkshire Building Society
  • Hargreaves Lansdown Savings
  • ICBC (London)
  • Industrial and Commercial Bank of China
  • Investec
  • MBNA
  • Metro Bank
  • Mizuho Bank
  • NewDay
  • Permanent TSB
  • Prepay Technologies
  • Project Imagine
  • Revolut
  • Sainsbury’s Bank
  • SG Kleinwort Hambros Bank
  • Starling Bank
  • Tesco Bank
  • The Co-operative Bank
  • The Governor and Company of the Bank of Ireland
  • The Royal Bank of Scotland
  • The Royal Bank of Scotland International
  • Tide Platform
  • TSB Bank
  • Turkiye Is Bankasi As
  • Union Bank of India
  • Vanquis Bank
  • Virgin Money
  • Wire-payer

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what is open banking?

How safe is open
banking in the UK?

Like all good financial technologies, open banking is designed to be very secure. It’s implemented by banks, so is subject to their rigorous security measures.

The consumer is always in charge of who is granted access to their data, and this access can always be revoked if they wish.

And if fraudulent payments are made, your bank or building society will pay your money back under appropriate circumstances.

In addition, open banking products and services are regulated by the FCA (or the European equivalent, if they’re located in the EU), and consumers are also protected by data protection laws and the Financial Ombudsman Service.