The Open Banking regulations, which took effect in the UK on 13 January 2021, really are a safe and secure way to give funding providers – much like Liberis – access to financial information efficiently, saving time and hassle for just about any applying businesses. Providers can access the necessary details through collaboration with open service developers and then use the data to decentralise decision making.

Naturally, providers have to comply with data protection rules, including GDPR regulations and best practice. Open Banking is also part of a sweeping piece of European legislation known as the second Payment Services Directive or PSD2. PSD2 would be the rules that require banks to spread out up their data to third parties, and Open Banking dictates they do so in a standard format.


In particular, it's been noted that small and medium sized businesses (SMEs) have experienced problems accessing finance with the traditional route of the banks; especially as the mainstream banking system has so significantly retreated from funding small businesses in recent years – with the total amount of bank overdrafts and loans outstanding to smaller businesses decreasing by nearly lb6 billion*in yesteryear five years. (*UK Finance Q2 2021 research).


Jonny Hawkins, Head of information Science at Liberis

Faster and easier application to access finance

To maintain growth and their contribution to the economy, SMEs are in need of simpler, faster access to finance; a different to the common lengthy applications and approval processes of traditional banks.


Open Banking is set to enable this improvement by putting customer data in the hands of those who are willing to fund quickly and responsibly. Where cashflow once existed in a complex ecosystem of different economic climates, businesses will now be able to enjoy greater simplicity in the click of a button. The potential for a single dashboard – run by Open Banking – that securely unifies all accounts instantly will help maximise supply chain value.

Increased transparency through Open Banking all data and knowledge is accessed

With Open Banking, finance could be more tailored to the individual needs of SMEs having the ability to build and access real-time reporting, liquidity positions, forecasting scenarios and supporting foreign currency.

Open Banking may also help SMEs address many of their common challenges for example cash-flow and paperwork, as many new fintechs become the source of innovative solutions with regards to answering these pain points.


Data protection and security

The security of Open Banking is ensured by the use of smart, integrated APIs. This technology can be used by both the banks and also the service providers – and sometimes a third party Open Banking processor too – to move the data. The law requires account providers to make use of strong customer identification, a process which allows the payment service provider to verify the identity of both user and also the service.



There are 5 amounts of security and data protection:

  • Bank-level security – Open banking utilises rigorously tested software and security systems similar to those used in internet banking.
  • It's regulated – Only businesses that have been authorized by the Financial Services Authority (FSA) will be permitted to use the Open Banking system in this initial phase.
  • You are in charge – SMEs can choose when and for how long they give providers access to their data.
  • Extra protection – The financial institution or building society pays the money back if fraudulent debts are paid, there is additional protection by data protection laws and the Financial Ombudsman Service.
  • Planning and forecasting – Open Banking makes it possible for timely data which will allow more efficient planning for future strategic initiatives.


Beyond UK borders

The most programmatic approach has been taken in the European Union, through both PSD2 along with a broader effort to foster competition in retail banking with the United Kingdom's Open Banking Standard. A key provision of PSD2 aims to foster competition and innovation for payments service provision in the European Economic Area by opening account use of nonbanks.


The United Kingdom's pending separation from the European Union is not expected to alter these data-sharing protocols, as numerous of PSD2's customer protection provisions are already protected in UK law and both government and financial community have signaled a desire to preserve banking services compatibility- another strong indication of data sharing's momentum. Italy, Belgium, and Germany each instituted common protocols as early as the 1990s to provide access to account information to smaller banks and organizations.

We are seeing the early stages of the seismic industry migration that will come into full force over the next five years. The emergence of innovations using the potential to drive simplicity and increase flexibility are turning a once complex web of monetary institutions into unified tools to increase value creation.


Open Banking is here now to stay and it's those fintech firms that adopt it are the ones determined to succeed in the future.

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