In banking, open data, a common pool of customer data that can be freely used and redistributed by anyone, could provide a number of benefits to customers and could increase competition in banking in the UK as well as in other jurisdictions. For example, open data could be used to improve the ability to make effective decisions about the use and management of money, or enable comparison applications to make more detailed and accurate assessments of how customers can save money.
The Open Banking Working Group was formed in 2015 to develop a framework for the design of an open API standard in UK banking focusing on personal and business current accounts. This Group is made up of experts representing a wide range of private and public sectors which should provide a diverse range of views. It is thought that having an open standard and open data in the UK will help improve the innovation and competition in financial services. However, datasets that contain personal or commercially sensitive information are not covered by this initiative.
APIs, or application programming interfaces, allow different software applications to communicate with each other and exchange data directly, without the need for third party input each time. APIs can, inter alia, be used to enable financial technology firms to make use of customers' bank data on their behalf and with their permission in innovative and helpful ways. For example, through external bank APIs customers can make use of applications on their smartphones which allow them to see clearly how much money they spend on food, and how their spending on food fluctuates through the course of a month or year. This initiative interacts with the trend of banks and financial institutions exploring new models for the delivery of relatively standard services required in their industry from a single, shared provider. We expect open data standards to gain greater exposure over the course of 2016.
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