What is Open Banking and PSD2?

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Open Banking (aka PSD2) forces the biggest UK banks to open up their precious data, which could mean big changes for the way we use money. By Rowland Manthorpe. This is older article, but explains topic well.

Banking in the UK has some big problems. Some of them: “People are paying too much for their overdrafts; money is sat in current accounts not earning interest; there’s not enough switching.”

Not much changes in banking in the UK. Sure, there are occasional new ideas -– ATMs, apps, contactless payments –- but decade after decade the fundamentals remain the same.

So what does Open Banking -– or PSD2 (Second Payment Services Directive), as it’s sometimes known -– mean in everyday terms?

The article then explains:

  • What is Open Banking exactly?
  • Why was Open Banking introduced?
    • Money management
    • Lending
    • Payments
  • Is it safe?

Like the internet itself, open banking benefits aren’t immediately obvious. The key thing to remember: anyone using an Open Banking service will not need to share their banking login or password with anyone but the bank. Good read!

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