Is open banking safe?

Open banking has fast become a major player in the way that banks and creditors assess their customer’s financial information in order to process loan applications and the suitability of the services and products they have to offer.

It can seem daunting to some consumers who may not have a great understanding of all things digital banking – and we don’t blame you, it can get confusing trying to understand just how advanced some banking technology is these days. From voice recognition to face ID logins, the technology used in the financial services industry is constantly adapting to meet the needs of its consumer market, and for those who did not grow up around technology, the prospect of having to learn a whole new era of banking might be terrifying. Hopefully, we can reassure you that open banking is safe and is actually a benefit to you.

What is open banking?

Open banking in simple terms is a service that allows banks and financial services organisations to view your financial information. It may seem like an invasion of privacy, but they can only access the information with your explicit consent, and only for relevant purposes like tailoring their services to meet your needs and checking that you can afford certain loan products.

How does open banking work?

Banks will use a secure framework to access your transactional history – it’s a bit like logging into your online banking from a business perspective. Barclays PLC, Nationwide, Danske, HSBC, Santander, RBS, Lloyds Banking Group PLC, Bank of Ireland and AIBG all must share certain information through open banking by law, although there are many other banks and building societies that are also now opting in to open banking due to the benefits it brings both to the banks and to the consumers.

How can open banking benefit me?

Open banking has various benefits. Some of the main advantages include banks being able to offer tailored services and products to meet your specific circumstances, while reducing the risk of the product being unaffordable or the service inappropriate. They can view your transactional data and work out if you might need a larger overdraft, or a smaller credit card limit. They will only suggest changes to help you and never to make your life more difficult, even if what they are offering may seem counterproductive at first.

Other creditors will use open banking to gain a good understanding of your income and expenditure information: with an accurate view of your salary, your rent or mortgage payments, and other bills, they can make more responsible decisions when it comes to lending you money. All authorised and regulated creditors must act as responsible lenders, and open banking helps reduce the possibility of people being lent money when they can’t really afford to repay.

Is there any risk of fraud with open banking?

As with almost everything, there can be a small risk of fraud but there are things you can do to help mitigate that risk.


Keeping all your passwords private and preferably not written down anywhere is a good way to ensure no one can access your login information. Additionally, making sure you have a strong password – including symbols, numbers, and capital letters – makes it much more difficult for any fraudsters to guess your password or hack into your bank accounts. Changing your password frequently (every 6 months at least) will also help.

Payment cards

If you have a debit or credit card, make sure you don’t have your pin written down anywhere. If you lose your payment card, report it as lost immediately. A lot of mobile banking apps have the feature to pause your card if you misplace it but you’re not sure it’s permanently lost, because we all do it – maybe it’s in the pocket of your jeans or you left it in a different handbag – so that if someone does find it before you, they won’t be able to use it. If it is permanently lost, make sure you tell your bank as soon as possible so that they can cancel the card and then send you a new one.

Identifying Information

Fraudsters will survey plenty of sources to try and imitate you. If you have any social media accounts, make sure your date of birth and address are not visible to the public. When uploading photos, check your debit card or address information is not visible in the background of the photo and, most importantly, make sure your profiles are only visible to the people you are friends with or that you allow to view it. This can be updated in your privacy settings on your account.

Technology is ever changing and we’re sure we’ve not seen the best of it yet, but as security and fraud prevention increases for the better, hackers and fraudsters get more creative. If something seems like a scam, it probably is, so it’s best not to engage with anyone or any emails, text messages or phone calls that either sound too good to be true, such as “you’ve just won the lottery, please send us your personal information so that we can process your winnings”; or that don’t really make sense, such as: “we’ve detected a fraudulent transaction from your bank account. Please confirm your username and password to proceed further”. Banks can see your transactional information without needing your login information so they will never request this.

Get comfortable with open banking

Open banking is benefitting millions across the UK, but it doesn’t mean you have to immediately jump on the bandwagon if you’re not comfortable with it just yet. Take the time to research and understand why lenders need to access your financial information so that you feel more secure in using open banking and allowing banks and other creditors to use open banking to assess your financial circumstances.

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