Open Banking 101: Everything You Need to Know
26th March 2025
What is open banking and how can it help you?
Imagine seeing all your bank accounts, savings, and spending in one place without switching between apps or logging into different websites. That’s exactly what open banking does—it connects your accounts securely and lets you manage your money.
So, how does it work?
Before open banking, your financial data was locked away in your bank’s system. If you wanted a budgeting app to help you manage your money, you had to type everything in manually. Now, with open banking, you can give permission for your data to be securely shared with third-party services that do the work for you.
How open banking makes life easier
1. See all your money in one place
You can connect all your bank accounts and credit cards into one app. That way, you might get a full picture of your spending without checking different apps.
2. Make saving easier (without even trying)
Some apps like Plum or HyperJar use open banking to round up your purchases to the nearest pound and pop the spare change into your savings. So, if you buy a coffee for £2.70, an extra 30p goes into your savings pot.
3. Get rid of unnecessary subscriptions
Apps like Snoop or Emma can scan your transactions and highlight subscriptions you might not even realise you’re still paying for—like that gym membership from last year that you forgot to cancel.
4. Get a clearer view of your bills
Some services like Moneyhub can let you see when your bills are due and how much they’ll be, so you’re not caught off guard.
5. Pay more securely and easily
Instead of typing in long card details, open banking allows you to pay directly from your bank account. It’s fast, secure, and doesn’t involve extra fees from card companies.
You stay in control
You decide what you want to share, who you share it with, and for how long. If you don’t find a service useful anymore, you can turn off access whenever you like. The data you share can include:
- Your account balance
- Your spending history
- Your direct debits and standing orders
- Your name and account details (only when needed for verification).
Is it safe?
Yes! Open banking is built with security in mind. Any company that wants to use open banking must be authorised by the Financial Conduct Authority (FCA), meaning they follow strict rules to protect your data.
How does open banking keep your money safe?
Your data is encrypted
Your financial information is protected with bank-level encryption, meaning it’s scrambled into secure code so no one else can read it.
You never share your bank login
Open banking works through secure connections called APIs (Application Programming Interfaces). This means you never have to type in your online banking password—apps only get the details they need through a secure link.
You’re in control
Your data is only shared if you give permission, and you can turn off access at any time. Most app permissions last 90 days, so you’re always in charge of what’s shared.
Extra security checks
Every time you connect a new app or make a payment, you’ll need to verify it’s really you—usually by logging into your bank app, using fingerprint or facial recognition, or entering a security code.
Banks monitor for fraud
Banks and open banking providers keep an eye on transactions to spot anything suspicious. If they see something unusual, they can block access and alert you right away. If you ever think something’s wrong, contact your bank and report it to Action Fraud.
Your data stays private
Open banking providers can’t sell your data or share it without your permission. They have to follow GDPR (General Data Protection Regulation), so your personal information stays protected.
How to stay safe when using open banking
While open banking is designed to be secure, it’s always good to stay alert. Here are a few tips:
- Only use trusted services—Check the FCA Register to make sure the company is authorised. If you’re unsure whether a company is authorised, you can check its status on the FCA Register.
- Never share your passwords—Your bank and open banking apps will never ask for your login details.
- Review app permissions—Make sure you’re comfortable with what data you’re sharing and why.
Keep an eye on your accounts—If you spot anything unusual, stop access immediately.
Common misconceptions about open banking
Some people worry about open banking because it’s still relatively new. Let’s clear up a few myths:
- “It’s complicated.” – It’s designed to be simple. You just approve access via your banking app, and the rest happens in the background.
- “It’s only for tech-savvy people.” – Not at all! Open banking services are made for everyday consumers, with easy-to-use apps that simplify money management.
- “It shares all my data.” – You control what’s shared, and companies can only access the data you agree to provide.
What’s next for open banking?
With artificial intelligence (AI) becoming a bigger part of finance, you can expect:
- More personalised banking services
- Easier ways to switch accounts and providers
- Even stronger security features
If you’re curious about open banking but unsure where to start, try linking a budgeting app to your account. You might be surprised at how much easier it makes to manage your money.