The Competition and Markets Authority has announced that an 'open banking' revolution is on the way. Experts have warned that the proposals mean sharing customer data between banks, which could dramatically increase the risk of fraud.
The CMA plans to launch an app, which brings together information on how you use your bank accounts. This will enable people to keep a closer eye on their finances, analyse how they use their current account, and identify the kind of account that suits them best. This will prompt people to switch to a better bank account and save money.
However, in order to do this, the banks will have to share customer data with one another, which opens them up to a new fraud risk.
Nobody expects the banks to start stealing money off one another. The problem is that an open platform like this provides another way in for hackers and fraudsters. Given the cyber-attacks that have been launched against high street banks, offering criminals another way in may not be the wisest approach.
Big Brother Watch warned it could make banking "more insecure, vulnerable to misunderstanding and open to cyber problems." It is concerned about cyber attacks, especially given the "denial of service attacks our high street banks have already faced."
Sue Lewis, Chair of the Financial Services Consumer Panel is also concerned about fraud, saying: "There is a risk of scams and fraud, particularly for the least savvy consumers."
Big Brother Watch adds that encouraging people to access their bank details through their phone is also risky, explaining: "Increasingly people do their banking on the move using unsecured and therefore vulnerable public Wi-Fi connections, connections which are known to be exploited by hackers, identity thieves and other unscrupulous characters lurking completely unseen online."
What can you do?
The new proposals will not kick in for another two years, which gives developers and cyber crime experts time to work on a robust system. Closer to the time, if they are convinced the system is safe, it may allay your fears
If they are unconvinced, the good news is there's no compulsion to use open banking. You simply tell your bank you don't want your data to be shared, and then don't download the app.
Of course this will then mean that you will need to do your own legwork to identify the best current account for your needs, and switch.