As consumers become increasingly reliant on technology and expect everything to be instant, easy, and mobile, the financial world is finally catching on. Of course, mobile banking is nothing new, and the number of fintech startups innovating the financial landscape is staggering in recent years. Such startups do everything from granting customers comprehensive snapshots of their financial health to helping them budget to making it easier to get a loan or mortgage. Still, fintech companies face a major obstacle: They don’t always have good access to consumers’ financial data, largely because banks won’t grant it, either worried about competition or about security in providing customer account access to third-party platforms. But the proposed Open Banking Standard aims to change that.

Defining the Open Banking Standard

The Open Banking Standard specifically refers to a UK initiative launched in 2015 by the Open Banking Working Group (OBWG) to explore ways that financial data access can help consumers understand their finances and make smart choices. The Open Banking Standard relies on data being securely shared or openly published through open APIs that would let third party apps, such as fintech companies, access users’ data through their bank accounts.

An open API can provide both easy access to openly available data (such as a bank’s product offerings) and secure shared access to private data (such as a third party’s access to a user’s transaction history). These APIs would be established by banks and could be integrated with third-party technologies to carry out specific functions related to the banking data. For instance, apps could allow customers to compare banking services to choose what products best suits their needs; in the UK, consumers can save up to £70 a year by switching to a bank account that’s a better fit.

The OBWG proposes that the Open Banking Standard would launch a new wave of banking innovation that would benefit users, developers, and banks. It would benefit users by providing an array of options to make informed choices about financial products and services. It would benefit developers because easy access to data would let them streamline existing apps, making them faster and easier to use, and develop new apps to fulfill customers’ ever-evolving needs. Finally, the Open Banking Standard would benefit banks by improving their interactions with customers and letting them offer modern and tech-savvy capabilities.

By allowing banks and third-party developers to work together, there are six main categories in which customers’ financial lives can be improved:

Current account comparison services, which would eliminate the friction involved with manually comparing prices and bank offerings on the Internet or uploading and downloading documents to do so.

Personal financial management to help consumers budget better and easily see snapshots of their financial history.

Access to credit, which would allow third-party lenders to offer users and businesses the best possible loan rates instead of relying simply on loans from their banks.

Affordability check, which would speed up loan processes by allowing lenders one-time access to a user’s bank data. Currently, many loan product applications require a user to manually upload bank statements.

Online accounting, which would allow businesses to connect accounting software directly to bank accounts, eliminating many manual processes.

Fraud detection by third parties, which can provide specialized attention to threats across accounts.

While the UK’s Open Banking Standard is currently in the works, with implementation rollout occurring in phases through 2019, other countries have also begun to explore the idea. In 2010, Germany implemented the Open Bank Project, and many American startups are working with banks to develop mutually beneficial APIs.