The interaction of devices and software applications is improved every year, and the Open Banking concept is aimed at ensuring such a connection with financial services. Open Banking is perceived as a complex of solutions and processes that allows banks to reliably exchange financial information and services electronically and with the permission of customers.
By opening access to their data and products through the application program interface (API), the bank allows third-party developers to effectively integrate banking services with financial and non-financial applications and services.
If you have intentions as to establishing a company for payment services in the UK, please contact us for legal advice on registering a payment platform in the UK.
Obviously, the Open Banking initiative does not care about developer convenience. The goal of this innovative approach is to expand the range of customer opportunities.
Companies that can access banking data and products will help you save money, simplify lending and make payments easier with new applications and services.
In general, the goal of the Open Banking concept is to bring banking services closer to customers. Due to the growing competition in the development and improvement of applications, not only developers, but also the banks themselves are interested. And this competition makes life a lot easier for customer.
How to access Open Banking
In the United Kingdom, there is an organization for the implementation of Open Banking (OBIE). The largest banks should create conditions for their customers to access and exchange their account data on an ongoing basis with TPP.
Using the API, authorized TPPs can, with the consent of the client, gain access to this client’s information directly from banks.
For security purposes, Open Banking Standards have been introduced. If you want to start a business in the field of payment services in the UK (to become a regulated provider), you must accept the requirements contained in the Open Banking Standards.
OBIE also manages the Open Banking Directory, which makes a “white list” of regulated providers.These include detailed security obligations, covering the need for informed user consent, harmonization with existing security standards, and adoption of an OAuth model for authorization protocols.
Registration of a payment service provider in the UK requires authorization. We can provide legal support, contact us.
In addition, API providers and users who are authorized or registered with the UK FCA or the Prudential Regulatory Authority will comply with strict safety regulatory standards.
Progress and Prospects
Digital IDs are likely to become part of the future of Open Banking. There is an ongoing discussion about whether to create digital IDs and how. Open Banking has the potential to support the formation of digital IDs.
The standardized authentication mechanism that Open Banking provides can enable customers to access their digital ID no matter where it is stored.
If you need legal support in the UK payment services business, we can help.
A verified digital ID can also simplify the current “Know Your Customer” requirements and therefore simplify access to digital services and reduce the operational burden on financial institutions. If an agreed set of standards for any identification information is followed, a suitable digital ID adopted by one service provider may be used by another. If you need to obtain a license for payment services in the UK, or if you have questions about the legal support of fintech business in the UK, please contact us to get an individual legal consultation.
The development of Open Banking in the UK continues. A review of progress demonstrates an increasingly widespread development. As new products are released and more consumers are attracted, the Open Banking ecosystem should further develop, increasing competition in the retail banking sector, as consumers now control their data. If you still have questions about how to choose a payment system in the UK, what documents are needed to start a financial services business in the UK, we recommend ordering legal advice on doing fintech business in the UK.