Open Banking is often misunderstood but offers possibilities many consumers already embrace
A survey by global API Management leader Axway reveals half of Americans have never heard of the term “open banking,” but 84% agree with its central tenet that they should have control of their financial data.
“It’s not just about compliance with regulation”
Open banking is the use of APIs to unlock financial data, enabling third-party software providers and banks to build new, customer-centric financial applications and services. Axway powers open banking implementations around the world on its Amplify API Management platform, and is currently deploying its first packaged product, built on Amplify, for open banking in Brazil.
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The 2021 survey found 81% of Americans feel their banks offer all the financial services they need in their day-to-day life, and yet at the same time, 40% of the same people use at least one finance or budgeting app other than their bank’s mobile app.
“We’re at a transformational moment,” explains Axway’s Head of Open Banking, Eyal Sivan. “People still trust and need their banks, but these new FinTechs are offering amazing tools that people really want to use. Open banking is the solution to making sure traditional financial institutions and FinTechs can work properly – and securely – together.”
The systems functioning behind the scenes to enable these types of experiences are still obscure to the general public: when the concept of open banking was explained to them, half of survey respondents did not think open banking was positive and worried about issues surrounding constant monitoring of their financial activity (33%), losing control over access to their financial data (47%), or even financial institutions using their data against them (27%).
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“At its heart, open banking is about letting people control their money,” Sivan added. “It’s encouraging that there is some awareness of the term, although clearly there’s a misperception that ‘open’ means less secure. In fact, open banking would give people significantly more control over their financial data than they have now, as well as improving security in general.”
Axway sees open banking as a strategic imperative as the world moves steadily toward an expanded financial ecosystem, as demonstrated by Europe and Australia’s open banking laws. “It’s not just about compliance with regulation,” concluded Sivan. “It’s about making sure you’re ready for the digital economy of the 21st century, opening up silos and freeing data so it can be controlled and leveraged by its rightful owner: the individual who created it.”
