The government said the change in law will enable new apps to “empower people to take greater control over their finances” and bank details.
From January 2018, ‘innovative’ firms will - at the request of the individual - be able to access data from all of their bank accounts.
The new regulatory regime will “transform the way people engage with their finances and make it possible to manage all of their finances at the touch of a button”, according to the Government.
Officials said the move will also drive competition in the financial services market.
Consumers will switch to the best product for them, and this competition will compel firms to provide better products and cheaper services, Treasury bosses said.
The Treasury said in a statement: “This could lead to innovations like managing all bank accounts from one easy-to-use app, enabling people to budget more effectively, or helping 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.”
Economic Secretary to the Treasury, Stephen Barclay, said: “Thanks to the changes we’re making, new FinTech firms can enter the market and offer innovative and transformative banking services that are tailored to meet people’s needs.
“New apps will empower people to take greater control over their finances. Whether that’s through managing all of their bank accounts in one place or helping to avoid unauthorised overdrafts when they have money elsewhere.”
Chief Executive of UK Finance, Stephen Jones, said: “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.”
The changes stem from the EU’s second Payment Services Directive.