Tiller explains: What is open banking?
Open banking is the next digital banking milestone.
Remember banking before ATM machines, when you could only get cash by going into your own bank? Before mobile banking apps allowed you to deposit a check into your account remotely? Or even before online banking, when you had to wait for a paper statement to arrive in the mail?
Today banking in the United States is on the cusp of another major innovation: open banking. It promises to make it easier to securely access and share your financial data. But what does this actually mean for you, and is it safe?
Here at Tiller we think seriously about the security of our customer’s financial data, so we want to share our perspective on open banking and let you know why we are helping lead this innovation.
Traditionally banks have viewed their customers’ data as proprietary.
They have worked hard to keep others from accessing this data, even when access would be in their customers’ best interest. For example, some banks block or strongly discourage their customers from using personal finance (“third-party”) tools that request transaction and balance data. This is often based on the idea that banks want to be the only source of truth. They don’t want their customers using other services that may make the banks less important in their customers’ lives.
Luckily, in addressing these fears some attitudes have begun to shift, and leading banks now see that they will not win by blocking access to data. Instead, they will grow by building better services that both enrich their customers’ experience and make it easy for them to take their data anywhere. This is the core of open banking.
Open banking is based on three premises
You own your data.
The information about what you spent yesterday and how much you still owe on your mortgage doesn’t belong to your bank, it belongs to you. It should be available to you easily, both through the bank itself and also via other reputable financial apps and tools that you choose.
Your data can be reliably retrieved with APIs
Banks that support open banking build reliable software interfaces that make it easy for you to share the data you want with the tools you want.
You won’t have to share your passwords
As open banking is deployed, we’ll see an end to financial tools asking you to share your banking usernames and passwords. Now, if you want to share your financial data from a bank, you first log in to that bank, then you authorize who gets the data, what data they get, and at what level. If you finish using a service, you can easily revoke its access at any time.
Open banking is a paradigm shift for the finance industry and for the tools and apps you use
Under open banking, when you apply for a mortgage you will be able to grant that lender temporary access to your bank statements for income verification. This will save you from having to upload, fax, or email these statements through insecure methods.
With open banking, you will also be able to grant personal finance tools like Tiller Money read-only access to your account information, transactions, and balances, directly from your bank website. Our trusted aggregators will no longer have to collect login credentials, nor will the data feeds be subject to interruptions when banks make unannounced changes to their websites. Everything will be done through authorized API integrations. You can also rest assured, knowing that these tools can’t move funds unless you’ve specifically authorized them with that power.
Like all innovations, open banking will come in waves. Tiller is one of the first services in the United States to support open banking. Tiller launched its first open banking partnership with Yodlee and Citi in 2020. Today and more have with more to come each quarter.
Many of the larger banks will add support for open banking through 2021, with smaller banks and credit unions following. We are working hard to be a leader in offering open banking because we know this is the most secure and reliable way for customers to share financial data with us. This is a big win for our customers.
If you are a Tiller Money customer and want to learn more details about open banking and your Tiller Money account, please read this letter in our Tiller Money Community.
If you are excited about open banking and haven’t yet joined Tiller Money, visit our site and get started with a 30-day free at Tiillerhq.com.