CW+ Premium Content/CW Europe

Open banking allows, and in some cases compels, banks to make it easy for financial services IT (fintech) companies to access the accounts of any customer who gives their authorisation for this to happen. Fintechs can then use that customer’s transaction data for the purposes of budgeting advice, loan approval and various other financial and investment services. It is also possible to initiate online payments through open banking, without the customer having to log into their bank account or use a credit/debit card. Although that may sound like a security risk, open banking is implemented in such a way that it is safer than some other forms of banking, with secure authentication for every transaction and no customer payment details retained by merchants. The open banking interactions are handled by application programming interfaces (APIs), which, ideally, provide a standardised way of accessing transaction data and initiating payments. However, standards vary from one country to another. How well each one is set and adhered to ...