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What is Open Banking? How does it make round ups work?

Round ups are a quick and easy way of saving little and often. Simply by rounding up your everyday purchases to the nearest £, you could be putting away on average £5 a week for your children’s future.

Just doing this could mean you grow a fund worth over £6,000 over the lifetime of your child’s Beanstalk Junior ISA!

But how do Beanstalk round ups work?

The technology behind round ups is something called ‘Open Banking’.

Open Banking is the result of a series of Government-led reforms to the financial services sector which came into effect in March 2018, and which are designed to increase competition, reduce costs and help drive the creation of new services for customers.

It is a secure way for your financial information to be shared between regulated financial services providers (such as Openwrks who Beanstalk work with) and your bank and then used to create new services that make it easier for you to find new ways to make the most of your money.

Put simply, it gives you more control over how you share your financial data.

Round ups are just one great example of how Open Banking is enabling new ways of managing your money, with data shared securely, and only ever with your consent.

With Open Banking, you can give your permission to authorised providers for:

1.Account information services. These let you see your account information from your bank in another app or website and can power features such as budgeting help and product recommendations. This could include budgeting apps, price comparison websites, and of course Beanstalk!

This means that when you open your Beanstalk app, you can see the recent transactions you’ve made on whatever account you have given permission to share information on. (We are working on an upgrade that will allow you to link multiple bank accounts.)

2. Payment initiation services. These will let you pay companies directly from your bank account and not through a third party like Visa or Mastercard.

We shortly hope to offer payment initiation within Beanstalk so that you can make top ups directly from your bank as well as through Direct Debit.

The consumer champions Which? have created a great video which shows an example of how you give consent to a third party app to see your financial information using Open Banking (watch video here).

The most important things to remember about Open Banking are that:

It’s secure - You’ll never be asked to share your password or login details with anyone other than your own bank or building society

You’re in charge - It’s always your choice if you want to use round ups by giving permission for a regulated app such as Beanstalk secure access to your data. And you can change your mind and remove that consent whenever you want

You’re protected - Authorised Open Banking third parties are regulated by the Financial Conduct Authority (FCA) or another European regulator, and will appear on the FCA Register, and/or the Open Banking Directory. Beanstalk is an agent of Openwrks which is how we offer this service.

And with Beanstalk, you are always in control.

You can either turn on ‘auto round up’ or go into the Beanstalk app on your phone and choose which payments you want to round-up by simply ‘swiping’ the transaction. You can even adjust that week’s total round ups.

At the start of each week, we initiate the collection of your total round ups through Direct Debit. Any round ups you make will be split between all the Beanstalk accounts you are linked to. For example: if you have 2 children and an account for yourself and you round up £5, each will receive £1.66 (with 1p left over!)

Whether it’s bringing all of your accounts from different banks together in one app so you can manage your money more easily, paying your self-assessment tax bill direct from your bank account, or investing round ups on your everyday spending to build a nest-egg for your children, Open Banking is about giving you control and security over your financial information.

What to know more? Check out https://www.openbanking.org.uk where you’ll find FAQs, details on a wide range of open banking mobile applications and online products available for everyday use and a great explainer video.

AS WITH ANY INVESTMENT THE VALUE CAN GO DOWN AS WELL AS UP. PAST PERFORMANCE IS NO INDICATOR OF FUTURE PERFORMANCE. THE TAX TREATMENT OF ISAS DEPENDS ON YOUR INDIVIDUAL CIRCUMSTANCES AND MAY BE SUBJECT TO CHANGE IN THE FUTURE.