Open Banking

Open Banking

The Future of Financial Services

The world of business banking is evolving at an extremely fast speed.

Open banking is the new ‘space race’ for the financial services industry and it is causing quite the storm but it is also making it much easier for small businesses, especially new businesses, to obtain a business bank account in the same time it would take to make a cup of tea and drink it...

So, what is Open Banking?

It is a specific financial services term relating to financial technology that refers to the use of open APIs (Application Programming Interface) that enable third-party developers to build applications and services around the financial institution. Greater financial transparency options for account holders ranging from open data to private data.

In simple terms, this means that Open Banking will define how your financial data will be created, shared and accessed by yourself, your chosen bank and third parties that have partnered with your chosen bank.

In other words, it is meant to improve customers’ banking experience in several ways by forcing the larger established (commonly known as ‘high street’) banks to be more competitive with newer and smaller banks which should result in lower costs, better technology, and better customer service.

The Front Runners

Two of the major front runner fintech banks who have taken to Open Banking are Tide and Starling, who offer free bank accounts to its customers.

Tide already has 1.5% of the UK business banking market share and Starling is very popular with freelancers and one-man-band businesses.

Both of them offer a beautiful banking app and Starling has recently won an international award for Best Open Banking Strategy in May this year.

We currently use Tide, and we are indeed a partner with Tide too which means we can obtain a few 'goodies' for clients.

In our opinion, Starling is also really great but both banks do have their own advantages and disadvantages and if you’re looking to obtain a new business bank you should ask yourself what do you need from your new bank and will Tide or Starling, as an example, offer this.

For example, Tide currently offers none of its customers an overdraft facility (Starling does) but - due to Open Banking - you can obtain an instant loan from Iwoca from within the app.

On the flipside, Starling only allows one user per bank account (i.e. no other person can gain access to it even for read-only access) whereas Tide currently enables businesses with more than one user (e.g. a two director organisation) to be able to access their bank account, albeit with a limitation or two.

Such is the beauty of Open Banking and the new crop of fintech of banking institutions, the security behind them is absolutely rock solid which is a nice by-product of their development.

Unfortunately, this is also a stumbling block for the banks themselves as it does currently affect user access as we’ve just mentioned.

However! Don’t fret just yet.

Tide and Starling have BOTH confirmed it is on their roadmap to ensure user access can be improved.

As an accountancy practice, we also love the fact that Tide and Starling also integrate directly into Xero, the world’s best accounting and bookkeeping software too, so this another feature you can take advantage of (if you use Xero, of course).

All in all, Tide and Starling are gaining so much ground with start-ups and small businesses in general and they can be great, simple and easy additions to your business infrastructure with minimal headaches...

Both of them have a mixture of great reviews and the odd bad reviews, thus, this is why it is so important to do a bit of research before you apply for either (or any other up and coming bank account out there) but at the end of the day, Open Banking is the future and fintech banks have truly grabbed the bull by the horns.

Overall

Tide is great for businesses with one or more individuals that need to manage or monitor daily banking.

And Starling is great for OMB businesses and freelancers where there will never be more than one user accessing the data.

If you want help obtaining a Tide account, get in touch and we can help you every step of the way.

All you need is a driving licence and about 20 minutes of your time.