As a result of the EU’s second Payment Services Directive, the government is bringing in a new regulatory regime for FinTech firms next year.
HM Treasury said doing so would transform the way people engage with their finances and make it possible to manage all of their finances at the touch of a button.
The rules will allow FinTech firms to access data from all of a consumer’s bank accounts, if the individual requests it.
The Treasury suggested this could lead to innovations like managing all bank accounts from one easy-to-use app, enable people to budget more effectively, or help consumers avoid unwanted overdrafts by making automatic payments between bank accounts when funds are running low.
New innovative apps could provide personalised product recommendations based on exactly how consumers spend their money, such as suggesting which savings product would suit best based an individual’s saving habits.
“Consumers will switch to the best product for them, and this competition will compel firms to provide better products. More competition will drive further consumer choice, and better and cheaper services,” it said.
If coordinated with the Open Banking initiative the changes could make a substantial difference to how people use and access their financial details.
Open Banking is a cross-industry project initiated by the Competition and Markets Authority which aims to provide secure way for customers to take control of their financial data and share it with organisations other than their banks.
UK Finance chief executive Stephen Jones, said: “We are excited by the potential for these reforms to enhance competition and innovation in the financial services sector – and welcome the publication of these regulations which mark an important milestone on the journey towards implementing it.
“The changes will allow customers to use details of their payments to help plan and manage their money better. What’s more, this is just the start.
“There are a whole host of benefits for customers, many of which we are just beginning to see,” he added.