How Open Banking can make your life easier

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Ever connected an app to your bank account? If so you’re probably one of millions in the UK already using Open Banking. And if not, you’re in for a treat – Open Banking is a game changer for your finances.

Although its popularity has skyrocketed in the last year, Open Banking is still a mystery to many. So we’ve shed some light on why it exists, and how it can make your life a lot easier. 

What is Open Banking?

Open Banking is a regulation designed to put you in control of your own transaction data. It requires banks to let you share your data with other banks and third parties so they can help you budget, save, compare financial products and manage your accounts. 

Why does it exist?

Back in 2016 the Competition and Market Authority (CMA) highlighted a problem – big banks don’t compete enough and small banks struggle to grow. This meant people were paying more than they should and not benefiting from innovation. The CMA proposed Open Banking as a solution and its implementation began in 2018. 

Open Banking has taken off over the past three years. More than 4 million Open Banking payments were made in 2020 – up from just 320,000 in 2018. Hundreds of thousands of people in the UK become Open Banking users every month.

What can Open Banking do for me? 

Open Banking is forcing banks to raise their game. It’s making it easier for you to compare and switch financial products, meaning banks must work harder to keep you as a customer.

Open Banking is also fuelling some serious innovations in financial technology. For example, you can now connect to other bank accounts and cards with Monzo Plus and Monzo Premium – meaning you can see all your balances and transactions in your Monzo app.


And it’s not just banks who’re using the new regulations to improve their services. For example, HMRC now lets you pay them directly from your bank account without having to set up the payment manually.

How does Open Banking work? Is it safe?

Banks can share your data with third parties using something called an application programming interface (API). APIs allow software at one company to talk to software at another company. This technology has been around for years and is used everywhere. It’s the reason you can see Uber fares on Google Maps, or use your Facebook login to create a website account. 

By law, every bank has to make an API available to third parties. Companies need authorisation to access a bank’s Open Banking API. Authorisation is controlled by Open Banking regulations – also called the Payment Services Regulations 2017, which brings the second EU Payment Services Directive (PSD2) into law.


Authorised companies have to prove they’ll keep your information safe and secure. Also, they aren’t allowed to casually rifle through your data – they can only access the information they need to provide the service you’ve asked for. For example, let’s say you use the Monzo app to ask for money from your other bank account. We’ll make a single request to do this, but we won’t access your account’s transaction history. 

There are other ways to give third parties your data, but they’re generally less secure as they involve handing over your passwords. Because we don’t use passwords, secure APIs are the only way you can share your Monzo data with another company.

How do I use Open Banking?

Third parties need explicit permission from you to access your data through Open Banking. They’ll ask for your consent before redirecting you to your online banking login. You can then log in securely without having to share your credentials with the third party. 

You never have to share your data if you don’t want to. This may limit which apps and features you can use, but it’s always your choice. 

Does Monzo use Open Banking?

Yes! Today, more than 1.3 million Monzo users are taking advantage of the Open Banking functionality in our app. Here are some of the great things you can do with our app thanks to open APIs working under the hood.

Make easy bank transfers

You can ask for money from another of your bank accounts without having to put in your bank details. Just click on the “Add money” button on the app home screen. 

🆕 And if you're a Monzo Business customer, your customers can pay you by easy bank transfer too.

Once you've sent them a payment request, they can pay you straight from their own bank's app or website. So there's no need to to type out (and triple check) a manual bank transfer.

See all your accounts at once

Monzo Plus and Premium users can connect to multiple bank accounts. This lets you see balances, payment histories and trends for all your bank accounts in the same place. Go to “See other accounts” on the home screen.

Prove your income to get an overdraft

Anytime you ask to borrow money with Monzo, we verify your income to make sure what we offer is affordable. We use a few sources of data to do this, including credit reference agencies and your Monzo transaction history. Sometimes these sources don’t give us enough information, meaning we may have to turn down your application.

But now you can use Open Banking to link to your other bank accounts, which can help us get the information we need to assess overdraft affordability. This means we can approve people who may have previously been turned down.

Open Banking - overdraft income verification

We're excited about how Open Banking is going to change how you can manage your money, and how Monzo can make it even easier to stay on top of your finances. Stay tuned for more new Monzo features using Open Banking! ✨