Here’s a question: have you recently linked your bank account to use a personal finance app, apply for insurance online, or use an online accounting platform?

If you answered yes, then there’s a good chance you’ve used open banking. Despite this, over half of consumers and one third of businesses say they’ve never even heard of it. But the truth is, open banking is a lot more prevalent in our financial lives than we might think.

As the title suggests, in this article, we’re going to share six products and services that are powered by open banking technology. But before we get to that, let’s answer an important question… what is open banking?

The basics of open banking

In a nutshell, open banking lets service providers access our bank account information or make/receive payments. This could be as simple as verifying our account name and address for a loan application or setting up an automated payment for a utility bill. All of our financial data flows through “pipes” called Application Programming Interfaces (or APIs for short), which is how open banking-powered products and services work securely.

Want to know more? Here’s a detailed breakdown of how everything works.

Now we’ve cleared that up, let’s take a look at six products and services powered by this innovative new(ish) technology.

1) Personal finance management

We all want to be more financially savvy, right? But it can be hard to know where to start. The problem is, without a comprehensive view of all our financial accounts (current accounts, savings, credit cards, loans, etc.) it’s tough to see where we can improve.

That’s where open banking comes in. By securely connecting to all of your financial accounts (with your consent, of course), personal finance management apps like Emma can provide an aggregated view of our financial information. Having a clear picture of our finances means we can easily track our expenses and set realistic financial goals.

There are two main features that make them valuable tools for managing our money…

Budgeting

Eight million of us are struggling with a debt problem. And, to make matters worse, a cost of living crisis is draining the average household’s savings. In fact, almost half of respondents in our recent survey only save 5% or less of their salary each month.

This lack of a financial safety net means that when unexpected expenses arise, people are forced to rely on credit cards or loans, which only compounds the problem. But what if there was a solution that could help us manage our money more effectively?

Enter budgeting apps, which leverage access to bank data to analyse spending habits and make automatic transfers to savings accounts. Learn more about how it works here.

Bill management

Managing household bills can be a real hassle, especially as more and more of us are going paperless and dealing with them digitally. Whether they’re piling up in our inboxes or popping up on our banking apps, bills are always at the back of our minds, demanding our attention.

But, the good news is, there are bill management tools that can take the stress out. Our latest report shows that an increasing number of consumers are turning to bill management tools to help them keep track of their bills. In fact, 68% are using them for the first time.

So, how does it work? By securely accessing our bank account data using open banking, these platforms can automatically categorise and track bills, provide real-time updates on payment statuses and highlight recurring payments for services we no longer need.

With Emma, we’re helping people put money away for more than just rainy days (we’ve even won an award for it). Read about our work together here.

2) Alternative credit cards

The path towards obtaining credit is notoriously complex. Regardless of whether we have a stable income above the median or not, credit isn’t always accessible. This is especially true for ‘credit invisibles’ like those who moved for work purposes with no credit history in the UK.

As a result, they can feel excluded from a system they contribute to… but it shouldn’t be that way. Thankfully, things are starting to change with the help of open banking.

Access to data has empowered a number of alternative credit providers, like Yonder, to look past an applicant’s credit score and focus on their true financial health. In other words, they can build a clearer, more accurate credit profile by considering factors like income and expenses in real-time. This provides the consumer with a quick and accurate decision and allows providers like Yonder to lend both responsibly and competitively.

3) Investing

Has the subject of ‘investing’ ever come up in a conversation? If so, you’ve probably noticed that people react differently to it. Some might tell you that it’s their way of planning for the future, while others might describe it as a personal interest or hobby.

For most, the concept of investing seems mysterious and out of reach - something that’s only accessible to those who are clever with money or have plenty of disposable income.

The bottom line is, investing feels daunting. But open banking is changing this by democratising access to investments and helping customers achieve their financial goals, regardless of their background or level of financial literacy. In fact, 62% of consumers in our latest survey have already begun using wealth management platforms like InbestMe.

By securely sharing our financial data with providers like inBestMe, they can offer personalised investment recommendations based on our unique financial situation. This means that even if we’re new to investing or don’t have a lot of disposable income, we can still access the benefits of investing and grow our wealth over time.

4) Accounting software

Running a business is hard work. On top of that, managing finances can be one of the most time-consuming and frustrating tasks of all. Keeping track of expenses, invoices, and receipts… it can be a headache. Especially when finance teams are doing it manually.

With the sheer volume of data involved, it’s no wonder businesses struggle with errors, duplication, and discrepancies. In fact, SMEs spend an average of nearly four hours a week reconciling payments and 20 hours a week manually calculating and monitoring cash flow, despite the risks and inefficiencies involved.

But there is a better way: accounting software that’s powered by open banking.

Intuit Quickbooks is a shining example, which uses real-time bank connections to give businesses a complete, real-time view of all their finances and cash flow. Data entry can even be automated to free up time. So, rather than manually uploading bank statements and documents, data can be pulled from accounts, categorised, and reconciled.

5) Business banking apps

While consumer banking has digitally thrived in recent years, many aspects of business banking has remained stubbornly old-fashioned. There are often limitations to what traditional banks can offer, especially for small and medium-sized businesses that may be excluded from certain services like flexible financing, merchant services or short-term loans.

But with the rise of business banking platforms powered by open banking, there are new opportunities for businesses to get a real-time view of their finances and borrow money more readily. Like Juni, a platform that helps small and medium sized businesses monitor cash flow, track return on ad spend, balance working capital requirements with tedious manual credit applications and more.

By leveraging open banking APIs, business banking platforms can provide businesses with real-time data insights on their cash flow position and bottom line. But that’s not all. Open banking APIs also allow businesses to integrate third-party providers like accounting software and payment gateways into their banking platform.

6) Insurance apps

Securing insurance can be a stressful process, especially when you’re trying to compare policies and providers (not to mention navigating the fine print). But thanks to new insurance apps that leverage open banking, the process has become much simpler.

Research shows that more and more consumers are turning to online insurance platfoms to manage their policies. But, there’s still a significant percentage without adequate coverage. For instance, a Direct Line survey found only 35% of people have life insurance.

Embedded insurance platform Certua’s open banking-powered cover calculator provides more accurate and personalised insurance policy recommendations. By offering a convenient and user-friendly way to apply for and manage insurance coverage, providers like Certua can help more people get protected.

And, by leveraging users’ financial data to provide real-time updates and alerts, insurance providers can help them to stay on top of their payments to avoid missed due dates.

Keep reading…

Are you thinking about embedding the power of open banking into your product? Check out these resources:

1. The complete guide to open banking payments
2. Navigating open banking providers
3. How to get buy-in for open banking

Ready to take the next step? Explore our API documentation or start testing Yapily’s API using our free sandbox environment.