Open banking allows for third-party financial services providers to access consumer banking information such as transactions and payment history. It is changing the way consumers use banking and financial services as well as the players operating in the industry. The main objectives of Open Banking include offering users more control over their financial data, encouraging innovation and the development of better and more customer-centric finance products.
While the finance industry used to be dominated by big banks, new and smaller businesses are entering this market daily. This is due to the fact that open banking allows these new players access to the same data that only banks used to be able to access back in the day. With this data, these emerging players have innovated to create new alternatives to traditional financial services. Open Banking encourages finance innovation, levels out the competitive landscape, allows you to find new ways to operate your business, provides a better customer experience, and creates new financial products and services. This offers all kinds of unique benefits for both consumers as well as companies.
Financial institutions and FinTechs using Open Banking, have also been able to create more personalised products and services to meet demanding and changing customer needs and expectations. Clients are able to open a new account and a credit card with a bank without having to go to the bank in person, and can also access discounts, points, and other gamification services. This in turn results in increased customer loyalty and retention. Greater insights into consumers’ financial information also simplifies processes related to security and fraud. For example, the Open Banking APIs can access transaction data and use this to recommend additional banking services or products that best match your client’s financial situation.
Not only that, but businesses have been able to reduce costs thanks to Open Banking as they have to pay for less transactions and operational costs and thus encounter lower fees, especially when compared to card payments. The introduction of Open Banking also provides many opportunities for new financial products and services. Financial institutions can innovate their service offerings, and startups and smaller banks and service providers can create products to revolutionise the finance industry.
Do you think your business could benefit from Open Banking? Check out our module and book a demo with our team of experts now to discover new business opportunities.