Posted by - August 29, 2019 11:59 am
Open Banking
What is it?
In this blog, MFW Sittingbourne Manager Nicola Clarke looks at changes affecting the entire banking system which come into effect on 14 September 2019. Read on to find out more about what these changes will mean to you.
Changes to EU Directive PSD2
The EU are making changes to the ‘Payment Service Directive’ (PSD2). This EU Directive covers the regulation of payment services and payment service providers.
The changes allow bank customers, both individuals and businesses to have control on who is allowed to access their banking information. This includes access by third parties. The aim is to widen the competition in the banking sector. This will result in banks not only competing against each other but also against everyone else offering financial services.
Sharing of information
Banks are required to provide the third parties access to their customer’s accounts through open APIs. However, these third parties will, from 14 September, need to be FCA regulated. Third parties will also have to be compliant with a number of factors and abide by strict regulations.
Third parties will, thereafter, only be granted read-only access and will not be able to make changes to your bank accounts or make any payments on your behalf.
Open Banking Register
You can identify if a third party is regulated for Open Banking by visiting the Open Banking Register.
Accounting Software connections
Many businesses will already be using bank feeds which allow the accounting software and the banks to connect on a regular basis. This is required to pull through the daily bank transactions into their relevant software. The main cloud accounting software companies have all been registered on the Open Banking Register:
If you do use the feature of automatic bank feeds, you will need to re-connect your automatic bank feeds. If not, then your old bank feeds will simply no longer work. Your accounting software should be flagging an issue to update your bank feeds accordingly, and the re-connection process should not take long. However, due to these new regulations you will, every 90 days, need to re-authenticate the connection between your accounting software and your Bank. Again, this is a simple and quick process.
In the meantime, should you need to discuss these implications further with us then do contact your nearest MFW office.
