The concept of open banking continues to gather momentum as an ever-expanding number of players – both financial and non-financial – adopt the technology to gain access to customer data.
Anyone with a bank account knows that their financial provider holds detailed records on how much we spend, when we spend it, and what we spend it on. Now, with open banking, this data can be shared with third parties – which in turn is unlocking a new wave of digital financial innovation.
According to Abdul Naushad, President and CEO, at Buckzy Payments Inc, the burgeoning world of open, shared financial data delivers greater flexibility in how a consumer can manage their money through better visibility of multiple accounts and more convenient ways to pay. But this is not the only benefit.
“As a result of knowing the characteristics of each customer, financial providers can better match their profiles with relevant offers, products and services,” explained Naushad. “With open banking, users can also combine data from multiple accounts, cards, and banking products from different providers within a single application. Thus, the customer experience improves through the possibilities of open banking. By creating online financial services and insurance catalogs, for example, banks and financial companies can promote their services.”
Latest Fintech News: National Funding Announces the Upsize of Its Bank Credit Facility to $100 Million
According to a 2021 report by McKinsey, although open banking is still in its infancy, it has the potential to reshape everything from bank accounts, credit cards, payments, mortgages, small business loans, and even insurance policies.
Naushad continued, “In our view, open banking is a significant moment to make banking better by delivering tailored, personalized solutions for every area of money management. That is the opportunity facing banks today.”
A critical driver behind the spread of open banking has been consumers allowing third-party providers to access and use the personal financial data held by their bank to inform new products and services. Banks make this data available to fintechs and other third parties via Application Programming Interfaces (APIs). API software tools and services connect different networks and systems to enable a seamless two-way exchange of specific data between companies and organisations.
The sharing of personal financial data has developed incrementally in recent years – first with the UK’s Open Banking Initiative in August 2016, followed in January 2018 by adoption of the EU’s Payment Services Directive or PSD2 by all member states. These initiatives have opened up consumer financial services to new players to compete with incumbents for customers and their money.
Download our top whitepaper: Building Reliable and Secure Fintech Systems in 2022
“This extra competition has focused the minds of banks on prioritising innovation. Legacy banks face intense cost pressures, fierce competition, and sky-high customer expectations. Only through offering customers new and differentiated products, services and experiences can they properly address these challenges. Open banking is the opportunity to do just that.”
Naushad concluded, “Open banking aims to widen consumer choice and financial services by encouraging banks to open key banking functionalities via APIs. This in turn will enable fintechs and other businesses to provide more products to consumers. This is why Buckzy has developed its Multi-experience Development Platform, a dynamic and comprehensive set of open banking APIs to power a bank’s digital transformation and deliver smarter customer experiences, faster.”
Latest Fintech News: JCB Announces The Launch Of Danamon JCB Precious Credit Card
[To share your insights with us, please write to email@example.com]