What is Open Banking?
3 min read

What is Open Banking?

All your questions answered on Open Banking!

Joe Lines

What is Open Banking?

Open Banking is a revolutionary new financial technology that enables businesses to securely share and access their financial information with third-party services such as Nook, as well as to enable Nook to initiate payments safely. 

Open Banking uses Application Programming Interfaces (APIs) to give Nook customers the option to securely make payments to suppliers, move money to Nook Wallets, and keep track of internal transfers on behalf of the customer’s traditional bank (e.g Barclays or NatWest).

Open Banking came about because of the Second Payments Service Directive (PSD2). This EU regulation aimed to give consumers and businesses more control over their finances by allowing access to payment accounts through secure, reliable third-party providers (TPPs). 

Nook uses a TPP called Yapily, a leading OpenBanking provider regulated by the UK Financial Conduct Authority (no. 827001). 

Open Banking offers two distinct access types for businesses using TPPs. Account Information Service (AIS) grants access to financial data, while Payment Initiation Service (PIS) provides the capability to make payments on behalf of a customer.

The good news is Nook has both AIS and PIS access, so our customers can see their bank data for their traditional financial institutions and also execute payments all from within Nook

Is Open Banking secure?

Yes - Open Banking is designed with security in mind. To use this service, third parties must be approved by the Financial Conduct Authority (FCA). You can check if a provider is approved on the FCA register (Check out Nook on the FCA registry here). 

Additionally, approved providers must follow strict data protection rules, and there is a financial ombudsman to assist with any issues (Check out Nook’s complaint process here). 

Finally, Open Banking is optional - you do not have to allow providers to access your data. Customers must always provide explicit consent before their data can be shared with any third-party service. Additionally, customers are provided with the ability to revoke access to their data at any time.

Rest assured that over 6 million businesses and consumers in the UK are already using open banking, and it's becoming increasingly popular.

Open Banking has been designed with security at its heart

Here is how: 

Bank-level security – open banking uses rigorously tested software and security systems. You’ll never be asked to give access to your bank login details, PINs or passwords to anyone other than your own bank. 

It’s regulated – only apps and websites regulated by the FCA or a European National Competent Authority can enrol in the Open Banking Directory. You’re in charge – you choose when, with whom, and for how long you give access to your data. 

Extra protection – your bank or building society should pay your money back if a payment is made which is unauthorised. You’re also protected by data protection laws and the Financial Ombudsman Service.

How does Nook use Open Banking?

  1. Verification of your business - To verify your business, Nook uses AIS data from your business bank (where available) to confirm that you are the legal representative of the company you are setting up
  2. Execute payments - Nook currently supports single and bulk payments for eight banks. However, most customers prefer to open a Nook Wallet for bulk payments, approvals, and delegation.
  3. Transfer funds to Nook Wallets - Open Banking allows you to easily transfer funds to and from your traditional bank to your Nook Wallet.

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