- Open banking rules come into effect this weekend (13 January) – which is set to fuel a boom in apps that will help people manage their money.
- Our data shows just how dramatically apps can change the way we engage with our money.
- There have been more than 677,000 downloads of our app, including over 350 on Christmas day and almost 500 on New Year’s Day.
- There are now more than seven times as many trades via the app as telephone trades.
- Among younger investors (aged 18-29), 42% of digital trades are via the app.
Sarah Coles, personal finance analyst, Hargreaves Lansdown:
"Open banking rules come into effect this weekend. It has unsurprisingly passed most people by, because few people get terribly excited about a technical change in the ownership of banking transaction data. But while the changes themselves may be dull, the implications are anything but."
"The change is likely to spark a boom in apps that will help people manage their money, and our data shows that being able to use an app to engage with your money has a transformational effect. So far we have had more than 677,000 downloads of our app, and we can see that people who have downloaded it check their investments twice as often as those who haven’t."
"People turn to an app at all kinds of times when they wouldn’t dream of tracking down a computer or phoning a company. On 25 December, for example, there were more than 350 downloads of the Hargreaves Lansdown app, while on New Year’s Day it was closer to 500."
"And it’s not just that an app makes it so much handier to check your financial position, it also makes it easier to change that position. Of our clients, almost one in five of those using the Hargreaves Lansdown app to check their investments, have also traded or topped up their investments using it. In fact we have more than seven times as many trades via the app as telephone trades, and among younger clients (aged 18-29), 42% of digital trades are via the app."
The open banking change
The new rules will effectively force the big banks to hand over ownership of account data to consumers - like their transaction history and spending habits. It means people will then be able to share this kind of information with other companies far more easily.
At the moment, if you want to use an app that keeps an eye on your current account transactions, you have to provide usernames and passwords, so they can access the information through online banking. The change will do away with this, using APIs (application programming interfaces) to let the digital systems communicate with one another directly.
One of the likely impacts is a boom in apps, designed to help people manage their money, because it will be so much easier to get hold of people’s data to feed into them.
The potential apps are limited only by the fertile imaginations of the developers, but could range from simply bring a number of current accounts together in one place, so you can manage them from a single app; to apps that alert you if your current account spending patterns are mirroring previous ones that pushed you into overdraft.
At the moment the rules only apply to the nine biggest banks – and five of them have asked for more time to comply - but there are plans to extend it to all online products with a payment facility. The regulations could also be applied to other financial products (although there are currently no firm plans for this). With sufficient expansion, this could mean apps that bring all your finances together to let you manage them in one place.