Providing ultimate user experience and jeopardizing the customer’s crucial data is what makes Open banking exciting and vulnerable at the same time.
It won’t be flabbergasting to consider open banking as a modern-day Prometheus in the banking sector.
Let’s dive in to understand how open banking is going to bring a revolution in the entire banking sector in the future by wrapping up all the venturing.
All About Open Banking
“Banking is necessary; banks are not.”
The one who dreams of changing the world is indeed the one who can see the future of the world. But, who knew the statement made by Bill Gates in 1994 would change the way we deal with the banking in the form of open banking in 2018.
“Open Banking is all about providing more glassiness and receptiveness to customer’s data”.
Open Banking has the power to transform the way people spend their money, buy things, and go shopping. To put it clearly, it is all about putting the customer at the core of the matter. The best part of open baking is the availability of open APIs that third parties can use to develop new products and services. Thereby, bringing tangible value to customers’ budgets.
API enables the smooth sharing of data between parties, has made life convenient for both companies and customers. A case in point: Uber combines Google Maps, Payments, and Telephony APIs into one app and provides its customers with a seamless mobility solution.
Likewise, open banking is utilizing the power of APIs to bringing more innovative products in the financial sector.
Now the question is, is open banking safe?
The answer is yes, it is safe.
Open Banking established on highly secure technology platforms and the APIs are highly secured. It means, only the customer can authorize their data.
How Open Banking Will Change The Face Of Banking?
Open Banking is an extensive plan that offers customers greater control and insight into their financials. Moreover, the transparent APIs would place more power in the hands of the user. Sharing data with third parties can help them take advantage of personalized financial solutions.
For example, consumers may have a current account with one lender, instead of banking with one of two banks. They will also connect from other providers to other financial services such as an insurance package, individual retirement plan, and stocks – all under their favorite user interface.
Innovative and tailored products and tools.
“It’s a newfangled approach in the banking sector to create innovative products and services”.
With open APIs, there is expected to be an upsurge in third-party personal financial management tools (PFM). Or accounting aggregators, thereby assisting customers in tracking their expenses. With the help of APIs, developers can curate innovative products to forecast events in your account through artificial intelligence, or offer recommendations and financial tools that will help you save money. There is quite a possibility that not all financial applications will offer the right products and services. In other words, they might rather recommend those products that would require you to pay referral fees or affiliate fees. So, it is very critical that you choose your financial tools wisely.
Automated accounting process.
Implementation of Open Banking will help businesses and consumers benefit from low-cost accounting processes. Integrated systems would be updated automatically as and when you receive or send payments. Banks usually allow third-parties to initiate payments on your behalf and make it easier for additional service providers to handle payments. This also gives you a benefit from a reduction in manual tax-preparation activities.
What will happen to the traditional banking system?
Why would anyone like to go for the traditional banking option when they have the power of open banking? Well, like any other industry and revolution, banks will be forced to change the way it works.
Think about a financial management tool that incorporates the consumer’s checking account, credit, debit, savings card, and also offers feedback focused on their income and spending patterns. Of course, banks need to discover new ways of marketing their goods:
Banks that provide extended services beyond the most commonly recognized forums for financing, saving, and payment; will dominate the FinTech market in the near future. There are many factors that have pushed banks to invest in Open Banking, offering numerous benefits from customer satisfaction to agility. It is quite noteworthy that the most significant taxi service in the world owns no cars and the most eminent media proprietor in the world will not produce any content. So, just maybe, the world’s biggest bank won’t even keep deposits in the future. Open Banking has opened new doors to collaboration and all we can do now is wait and watch what the future holds.