What is Open Banking?

Open Banking jargon dictionary

Chapter 9

There is a lot of Open Banking jargon which, for those outside of the financial services industry, will look and sound like complete and utter nonsense.

This Open Banking jargon is used regularly but isn’t always simply explained. Our Open Banking jargon dictionary has been put together to translate these acronyms and keywords into simple terms.

 

Affordability – This is how lenders assess whether a person could comfortably afford to repay a new financial product. It’s based on the amount of disposable income that a person currently has and whether taking on another financial commitment would cause unmanageable financial distress.

 

AISP – Account Information Service Provider. An FCA authorised business that can provide services to customers using just the information from their bank account.

 

API – Application Programming Interface. A way of securely transferring information from one party to another.

 

ASPSP – Account Servicing Payment Service Provider. A bank or building society that provides current accounts.

 

BCA – Business Current Account. A current account that a business holds with a bank or building society.

 

Categorised data – The categorisation of data is simply the process of grouping transactions from a person’s bank statement so that they can be more easily used for purposes such as assessing affordability, income verification or budget planning.

 

CMA – Competitions and Market Authority. The CMA is an independent non-ministerial department within the UK government. The CMA  promote competition for the benefit of consumers both within and outside of the UK, evaluating markets to ensure that one business isn’t ruling them all whilst not providing the best service for their customers. The CMA implemented Open Banking within the UK.

 

CMA9 banks – The CMA9 are the 9 largest banks in the UK. Between them, they provide 90% of the UK population with bank accounts. These 9 banks were the first banks required, as a result of the CMA’s investigation into competition in the retail banking sector, to provide Open Banking APIs to other regulated financial services businesses by 13th January 2018.

 

Connection journey – At OpenWrks we call our connection journey Flow. This is the journey that a person takes to give permission for a third party business to access their bank account.

 

Consent – Every person needs to give their explicit consent for any third party business to access their bank account. 

 

FinTech – Simply a combination of the words ‘Financial’ and ‘Technology’. It’s a term used to refer to businesses within the financial services sector that use technology to create new, or improve existing financial processes and products.

 

Normalised data – Can also be referred to as standardised data. Because each bank has their own way of presenting data, normalisation means the transactions, balance and other account information are made to all look the same. It just makes the data easier to read, understand and use.

 

OBIE – The Open Banking Implementation Entity. An organisation created to make Open Banking a reality. They work with nine largest banks in the UK, regulated financial services businesses, like OpenWrks, and other stakeholders in Government to ensure Open Banking is delivered. The OBIE develop and define API, security and messaging standards.

 

Open Banking – With your consent, it is the secure way to share bank account information with other FCA regulated and authorised financial services businesses.

 

Open Banking Directory – A ‘whitelist’ of FCA authorised and regulated businesses that are able to use Open Banking APIs.

 

PCA – Personal Current Account. A current account that an individual holds with a bank or building society.

 

PISP – Payment Information Service Provider. An FCA authorised business that can provide services to customers that include making payments and moving money.

 

PSD1 – The First Payment Services Directive. PSD1 is legislation implemented by the European Union to improve the financial services sector.  

 

PSD2 – The Second Payment Services Directive. PDS2 is an update to PSD1. It is legislation brought in by the European Union to improve the financial services sector.

 

PSU - Payment Service Users. Customers of personal and business banking. 

 

RTS – Regulatory Technical Standards. Refers to technical standards put in place under PSD2 to ensure that systems and technical infrastructure of financial services businesses across the European Union are consistent and adhered to.

 

TCF – Treating customers fairly. The regulation implemented by the FCA to ensure that customers are treated fairly within the financial services industry. This means that every business has to adhere to a certain standard of customer service and that the products or services provided to them meet their needs. All firms must be able to show consistently that fair treatment of customers is at the heart of their business model.

 

Tokens – An ID that is used to anonymously verify a specific user through an API connection. It means that any data transferred by an API is anonymised. These tokens have a time-limit and an expiry date.

 

TPP – Third-party provider. An FCA regulated and authorised business that can use Open Banking APIs to connect to bank accounts and provides a tool or service.

Chapter 1

What is Open Banking?

Everything you need to know about Open Banking.

Chapter 2

How we got here

Way back in 2013 The Competition and Markets Authority (CMA) started a review of the UK retail banking industry and financial...

Chapter 3

Who are the participating banks

9 UK based banks were ordered to create Open Banking APIs. These participating banks are referred to as the CMA9.

Chapter 4

How secure is Open Banking?

Open Banking is very secure - as secure as your online banking. The Open Banking API endpoints have been built by the banks...

Chapter 5

What data will be shared?

The information that you choose to share through Open Banking will vary depending on the service that you want to receive.

Chapter 6

How do I provide or remove permission?

Your online banking is the only place where you can control who has permission to see your bank account and for what purpose.

Chapter 7

What does AISP & PISP mean?

To be fully authorised through PSD2 to use the Open Banking APIs businesses have to be registered as either an AISP or PISP.

Chapter 8

Quickfire Open Banking FAQs

All your questions answered in our quick fire Open Banking FAQs.

Chapter 9

Open Banking jargon dictionary

Our Open Banking jargon dictionary has been put together to translate acronyms and keywords into simple terms.