When relocating to a new country, learning the local banking system is one of the first challenges you’ll face. In the UK, Open Banking—introduced in 2018—has transformed the banking industry by allowing you to share financial data with authorised providers.
This comprehensive guide will walk you through everything you need to know to navigate the UK’s Open Banking system with confidence. Once you’re all set up, Remitly can help you send money back home quickly and securely.
Understanding Open Banking in the UK
What is Open Banking?
Open Banking is a secure system that lets you opt-in to share your financial data with trusted third-party providers (TPPs). Launched in 2018, it’s changed the way people in the UK handle their money, offering greater control and better access to financial services.
With Open Banking, you can:
- Link all your accounts with different banks in one place
- Use smart financial tools to budget, save, and manage spending
- Get better deals on loans and credit cards
- Take control of your finances using real-time insights
It’s all about making banking more flexible, competitive, and tailored to your needs. Just like at Remitly, where we help immigrants manage their finances by offering fast, secure money transfers worldwide.
The UK financial landscape for immigrants:
Moving to the UK? Getting to grips with the banking system is a big step in settling in. The good news? The UK financial landscape is well-developed and offers plenty of options.
Here’s a quick breakdown of the main players:
- High street banks: Banks like Barclays, HSBC, and Lloyds are the big names with physical branches nationwide.
- Building societies: Building Societies are similar to banks but often with better saving rates and a more customer-focused approach.
- Online banks: Monzo, Starling, and Revolut offer app-based banking with useful features and no need to visit a branch.
Opening a bank account in the UK
Can immigrants open a UK bank account?
Absolutely! One of the biggest concerns for newcomers is whether they can become a UK bank account holder—and the good news is, yes, you can. Your residency status might affect the type of account you’re eligible for, but there are plenty of options, even if you’ve just arrived.
Required documents
To open a bank account, you typically need:
- Proof of identity:
- Valid passport
- Biometric Residence Permit
- National ID card (EU citizens)
- Proof of address:
- Housing contract
- Council tax bill
- Utility bill (less than 3 months old)
Types of accounts available
Current accounts
- Ideal for everyday banking
- Typically come with a debit card
- Can set up direct debits and standing orders
Basic accounts
- Don’t include an overdraft
- Suitable for those with limited or no credit history
- Available to most immigrants
Online accounts
- Straightforward application process
- Often require fewer documents
- App-based banking experience
Regulatory requirements and Open Banking
UK banking regulations
The UK’s banking industry is tightly regulated to keep your money and data safe. Open Banking follows strict rules set by the Financial Conduct Authority (FCA) to ensure:
- Strong data security: Only authorised providers can access your information. This includes strong encryption tools, authentication methods, and regular security audits.
- Consumer protection: Take control by giving permission to third parties to access your data. You can withdraw consent at any time.
- Fair competition: New competitors can offer innovative financial products, breaking traditional banking monopolies. Open Banking also makes it easier to switch accounts and compare fees.
- Transparent services: No hidden fees or confusing terms. This allows for tailored information regarding credit cards, loans, or saving accounts instead of generic financial advice.
How does the Immigration Act 2014 affect this?
The Immigration Act 2014 requires banks to check your immigration status before opening an account. They do this by running your details through a Home Office database. If you’re not legally allowed to stay, the bank will refuse your application—and they can even freeze or close accounts if your status changes later.
But don’t worry—you can still open an account if you have the correct documents, like a valid visa, residence permit, or refugee status. The tricky bit? Some newcomers struggle with the paperwork, which is why many immigrants turn to digital banks for a more straightforward process.
Role of the Financial Conduct Authority (FCA)
The FCA plays a big part in ensuring the UK’s financial system runs smoothly. Here’s what it’s responsible for:
- Regulating financial services: The FCA keeps an eye on banks and financial institutions to make sure they follow the rules and treat all customers fairly.
- Protecting consumers: The FCA enforces rules to keep customers safe and ensure financial products and services are not misleading. It’s all about guaranteeing you’re not getting ripped off.
- Oversee Open Banking: It makes sure that banks and third-party providers stick to Open Banking rules.
- Authorising TPPs: The FCA gives the green light to fintech and other companies that want to access your financial data, making sure they are up to standard and operating securely.
Open Banking has many advantages, but it’s also useful to be aware of the potential risks. Check out the table below for a quick overview of the pros and cons, and some tips on keeping your financial data safe.
| Benefits | Risks |
| Better financial management: View all your accounts in one place, easily track your spending and better stick to your budget. | Privacy risks: Despite stringent security measures, there are still concerns about the potential theft or misuse of customer data in Open Banking. |
| Improved services: Grants access to better financial products, quicker international money transfers, and automated savings tools. | Regulatory compliance: With products and services spanning various regions, effective enforcement of banking standards and holding parties accountable for non-compliance can be difficult. |
| Increased competition: Benefit from lower pricing, lower fees, and better interest rates with more competition among banks and TPPs. | Data breaches and fraud: Sharing financial data between institutions increases the risk of data breaches, despite robust authentication and encryption methods. |
How can you keep your financial data safe?
- Verify that the service provider is legitimate by checking the FCA register.
- Read user reviews before trusting any new app or service.
- Protect your accounts with strong passwords, and use two-factor authentication for an extra layer of security.
- Regularly check your bank accounts for any unusual transactions and report them immediately.
Popular Open Banking apps and services in the UK
Here’s a breakdown of some popular Open Banking apps and services you can take advantage of:
Money management apps
- Budget tracking: Apps like Mint let you track your spending across all accounts, making it easier to stay within your budget.
- Expense categorisation: With apps like Emma, you can categorise your spending automatically, helping you to see where your money is going each month.
- Savings goals: Set up automatic savings with apps like Chip and save a little bit every day, week, or month without even thinking about it.
Case study: helping immigrants build credit in the UK
HSBC UK, in partnership with Nova Credit, allows newcomers to the UK to use their international credit history when applying for an HSBC credit card. Immigrants can share credit history from up to 12 countries, including India, the US, and the Philippines, helping them overcome the challenge of having no UK credit history.
Research shows that 66% of working-age immigrants face delays in getting credit products because of this. This partnership aims to make it easier for newcomers to access credit as they settle in the UK. The collaboration follows HSBC’s $10 million investment in Nova Credit in 2022, supporting more inclusive financial services for immigrants.
Future of Open Banking in the UK
The UK’s banking system is set to change drastically with the introduction of PSD3 in 2026, promising more streamlined and secure financial services for immigrants and residents alike.
Key Developments
- Improved regulatory standardisation: PSD3 will enforce uniform Open Banking processes across European countries to create more consistent financial experiences.
- Increased security measures: Strong Customer Authentication (SCA) will require security changes every 180 days, improving the protection of digital financial transactions.
- Integration of more services: Beyond traditional banking, Open Banking is moving towards open finance, integrating products and services in insurance, investments, and savings industries.
How Will Financial Services Evolve?
- Banking-as-a-Service (BaaS): More and more banks will offer platforms that combine traditional banking with lifestyle services.
- Cross-industry collaboration: Non-banking institutions like telecommunication and energy providers will utilise Open Banking to improve the customer journey.
- Innovative financial products: Expect more tailored services that combine banking, insurance, and payments.
FAQ
What are the requirements for Open Banking compliance?
In the UK, banks and third-party providers must be authorised by the FCA and follow strict security rules to meet Open Banking regulations. This includes Strong Customer Authentication (SCA) and ensuring customer data is kept safe.
Is Open Banking mandatory in the UK?
No, Open Banking is not mandatory and individuals can opt-in to use the services. However, banks and financial institutions that are part of the Open Banking network have to offer the option for those who choose to use it.
How can a foreigner open a British bank account?
Foreigners can open a bank account in the UK by showing proof of ID, proof of address, and any necessary immigration documents. Some banks might ask for extra things, like a UK address or a minimum deposit.
