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Posted by: Dental Design 7th April 2018
Open Banking has been on the cards for a while, but now that it’s finally here the financial sphere is abuzz with anticipation about how this legislation will impact banks, consumers and businesses. Some are citing the reform as one of the greatest shake-ups in personal finance in years, while others have warned of the potential negative implications open banking could have on data security.
However you choose to look at it, change is on the horizon, with the application set to “Fundamentally change how we manage our money” according to the project’s chief UK architect. As such, it’s important that you educate yourself fully on Open Banking covering all aspects of what it is, how it works and what it could mean for dentists and practice owners.
What is Open Banking?
In the summer of 2016 when most people were preoccupied with the topic of Brexit, the UK Competition and Markets Authority (CMA) conducted a review of the retail-banking sector. It found that the market had become stagnated with established, larger banks rarely having to compete for customers’ business, while smaller and newer banks were finding it difficult to grow and access the market. Open Banking was created as a result of this, with the aim of encouraging more consumers and businesses to switch bank accounts. In the long run, this should diversify the financial market and make it easier for rivals to compete.
Thanks to the Open Banking reform and a new European-wide regulation titled the Second Payment Services Directive (PSD2), which came into effect on 13 January, ownership of personal financial data will be transferred to the consumer. What this essentially means is that data can now be shared – as long as you give permission – with other banks as well as authorised providers, to allow you to keep better track of your finances and find suitable financial products at competitive rates.
On a consumer level, this should make using multiple services and financial bodies much more straightforward. It will also be possible in time to use one app to manage all your accounts, even if they’re spread across different banks, and move money between them. To counterbalance the potential risk of losing custom to a competitor, banks and providers will have no choice but to improve their services and facilitate money management, so Open Banking could prove to be beneficial in more ways than one. As for future possibilities, one can only wonder at where Open Banking might steer the financial market, as banks and fintech companies alike compete to innovate new products and services.
If you are a practice owner whose business is classified as a small or medium enterprise, Open Banking could help to provide valuable insight into your income and expenditure. It is also predicted to make accessing credit from banks much easier, as relevant information will be able to be passed to a credit decider at the click of a button, and information analysed to identify the best business accounts and loans. By opting for Open Banking, experts say that it will also be easier to avoid unwanted overdraft charges, as applications will be designed to alert you when your account dips into the red.
What you need to know
It’s important to point out that you don’t have to share your data if you don’t want to, because while the changes mean that banks have to allow your information to be shared, it requires you to give permission. If you do opt in but change your mind later on down the line, there is the option to withdraw your permission at any time. The other thing to stay mindful of is that if something were to go wrong, your bank would only protect you if your data were shared with an authorised company. To confirm whether a provider is authorised, you can check the FCA Register.
So there you have it. Open Banking is now available should you wish to explore its applications, but whether you choose to use it will depend on whether you’re happy to share your data with third parties. Before you make up your mind be sure to speak to an Independent Financial Adviser for expert advice.
It remains unclear to what extent Open Banking will impact dentists and dental practice owners, but one thing is for certain, and that is that all options should be considered to ensure you get the best results with your finances.
For more information please call 0845 345 5060, email firstname.lastname@example.org visit www.money4dentists.com
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