The new Open Banking rules and pre-employment screening

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Data is central to our very existence and is often at the forefront of new legislation as our demand and reliance on data gets ever more ingrained.

Open banking is a new directive which came into force on 13th January 2018. Financial data regarding spending patterns and other details used to belong to the banks. Due to open banking, that data now belongs to the customer, who will decide what data is shared, with whom, what can be done with it and how long it can be shared for.

Britain’s 9 largest banks, Santander, HSBC, RBS, Barclays, Lloyds, Bank of Ireland, Allied Irish Bank, Danske and Nationwide, will now be forced to release their data in a standardised and secure way, so that it can be shared more easily between different organisations.

Many believe that Open Banking will lead to more invention within the financial services industry, as new, smaller banks begin taking on the big boys with innovation and modernisation.

But how might this affect pre-employment screening?

The new open banking rules could mean that potential employers could more easily access the banking data of applicants. Considering that more and more employers are carrying out credit checks on applicants, open banking could make this process faster and more cost effective. Financial information can be hugely telling for potential employers, although it’s use in the recruitment sector has been heavily criticised.

The secure technologies and standard API’s which enable bank customers to give access to bank data for third parties could eventually be utilised within pre-employment screening, with candidates giving potential employers access to their employment and educational history, and maybe even a central record of references.

The idea behind open banking is that is should be easier to view and manage your finances, by sharing your data in a secure and standard way. Could this same idea be utilised within recruitment as a new way of managing the data surrounding your employment history?