You make your daily payments from your checking account, and when you need to buy a new car or a home, you probably just take a loan from the bank. But today, instead of just satisfying the daily financial needs, emerging technologies are creating more options for you. And what if we tell that you can save up your money, buy easily and pay effortlessly? Sounds crazy, right? But with open banking, the impossible is possible now!
Today, 8 out of 10 financial firms are adopting or planning to adopt open banking.
Ever since the inception of this concept, banks across the globe have been quite stiff with respect to their take on this novel idea. At WebMob, we have always kept a close eye on these trends and thus, we are here to disclose all you need to know about open banking before it actually steals the show.
What is Open Banking?
The term open banking generally means the sharing of financial information electronically, securely, and only when the customer approves of it. Application Programming Interfaces or APIs allow third-party providers (TPP) to access such information and use it for the development of new applications and services. In a nutshell, the ultimate aim of open banking is to provide a better experience to the customers.
Over 71% of financial institutions feel that open banking is a positive initiative, while 77% agree that it is a radical change for financial services.
How is Open Banking Proving to be Revolutionary?
Open banking is being considered as one of the striking sectors in the FinTech industry. It has allowed banks to ‘open up’ and we acknowledge the Payment Services Directive (PSD2) for bringing this change. It has introduced AISP and PISP in the field and they’re all set to turn the landscape of traditional banking.
- Account Information Service Provider (AISP)
These TPPs are authorized to retrieve account data provided by banks and financial institutions. The data obtained is then analyzed to gain insights and develop value-added services for the customers.
- Payment Initiation Service Provider (PISP)
These TPPs are authorized to initiate payments into or out of a customer’s account. In order to operate and carry out such transactions, the PISPs have a specific license.
All of this has combinedly offered plenty of opportunities for creating new value-added services, streamlined lending, automated accounting, and much more.
Now, when banks are finalizing their open APIs, and the FinTech industry is providing excellent innovations, the customers have found themselves in a big dilemma about whether to choose open banking or not!
To make things crystal clear for you, let’s have a wider look over the benefits of open banking.
- Banks can easily connect to the APIs of the other service providers in the market by opening their APIs and also expand their offerings to the customers.
- Bank will have all the relevant data obtained from the customers and thereby analyze the same to provide better-customized services.
- With the introduction of digitization through open banking, the banks can improve and automate the existing services and products. Also, they will able to adapt to the changing business trends in the market as well.
- The customers can view the necessary information in other partner banks through a single interface itself.
- FinTech companies will be able to innovate new products and services such that the customers can plan their finances, manage loans, and investments in a better manner.
- They will able to create marketplaces for different niches of services, such that the customer can make use of the best or access all through just one interface.
Did you know that 84% of the financial services companies are investing in open banking products and services?
Should I Shift Towards Open Banking?
Yes. You definitely should. With the blink of an eye, open banking is going to change the face of the finance industry. Due to the current obstacles being faced by traditional banks, they will be forced to make the move, while the FinTech industry would surely adopt a model which will simplify their regulatory and compliance requirements. And for a customer- it’s a win-win situation as there would be more affordable and customized services, more convenient operations with financial tools, lower costs, and increased efficiency.
When you opt for the change, you need a guide for help and there couldn’t be a better place than WebMob. With the best practices used in various financial services and efficient platforms and FinTech, we are here to help you keep up with the developments in the finance industry.
So, come join us and embrace the technological revolution in finance.