Dr Emma Black, managing director of Cascade Cash Management, explains here why the UK needs Open Banking.

“In January 2018, the UK’s open banking regulation became effective. This legislation forces UK banks and building societies to open up customer data with the customer’s consent to regulated UK companies. Nearly nine months later, however, and a YouGov poll has reported that 72% of UK adults don’t know what it is.

“Open Banking, along with the EU’s second Payment Services Directive (PSD2), has modernised payment regulation and the sharing of customer data to improve competition in markets by making it easier for customers to have more choice and more control over their money and financial information.

“The nine largest UK retail banks and building societies (namely Barclays plc, Lloyds Banking Group plc, Santander, Danske, HSBC, RBS, Bank of Ireland, Nationwide Building Society and AIBG) are now legally required to allow certain customer information to be shared securely online via Application Programming Interfaces (APIs) with other regulated companies. Other banks and building societies are allowed to voluntarily do the same. As it stands, HSBC is the only major bank to have created an app (‘Connected Money’) for its customers to hold all of their accounts in a single place.

“There has however been a wide divergence of interpretation when regulation and legislation is enacted in the financial sector and so Open Banking requires banks and building societies to standardise the APIs used to allow for consented third-parties to ‘talk to’ providers using a similar architecture.

“In the first instance, the benefits of open banking allow for customers to compare the details of different current accounts and other banking services (such as the location of branches and ATMs) more easily. It is envisaged that in due course, Open Banking technology can help improve customer outcomes making it convenient to view all of your accounts in one single place, with opportunities for personal financial management apps to be created to help customers understand their spending habits better and manage their debt with pro-active alerts to choose lower interest rates or lower overdraft charges. It is also intended for business customers to obtain a series of tools to help cash flow management, access to credit and day-to-day management of accounts.

“Despite these benefits, a YouGov poll indicated that 72% of adults do not know what Open Banking is while only 14% of those aged 18-24 aware of the legislation. The poll showed that the more affluent ABC1 group is more aware of Open Banking with 35% of those polled stating they have heard the term. For those who have heard of open banking, 20% stated that account aggregation would be the biggest benefit with 8% stating money management would be useful and 7% highlighting the benefits for choosing the right account.”

Cascade Cash Management, an online savings platform, allows for customers to view their savings accounts in one place. The service was created to generate enhanced cash returns and increased protection on deposits through professional cash management. The Cascade team can manage funds on behalf of clients or depositors can use the portal with their advisor to manage their own savings. Partners including IFA’s, solicitors, attorneys, accountants and many more can also self-brand the product for presentation to their own clients.

Emma continues: “We are very excited at the truly positive impact Open Banking can have on the UK financial sector. Here at Cascade, Open Banking is a core part of our future strategy and we are confident that customers will be able to reap the benefits in the next 5 years.

“We have a mountain of case studies where longstanding customers of the major high street banks and building societies have earned very little on their hard-earned cash year after year. Through Cascade, our customers have significantly increased the interest earned on their savings through shopping around. We are encouraged by Open Banking and will be working hard to share these benefits with our exclusive community.”

For more information please visit www.cascade.co.uk