What is Open Banking?
Open Banking is a trending, brand new and secured way for consumers to indulge in their banking activities. This banking is meant to enhance the customer’s experience. It gives consumer more options to control of their money, financial information and transactions. It also makes easier for the banks or companies to offer innovative services which results in lower cost, and better customer services. Open Banking helps its consumers to compare their current accounts details and other banking services. It has the power to revolutionize the way the customers move and manage their money.
How will Open Banking benefit you?
- Introducing API in banking
Open banking brings valuable benefits to consumers, by combining their financial products at one place with the help of API (Application programming interface). It provides new ideas of spending and even guidance about saving money. Companies will be able to develop new online applications which will give consumers the power to share their banking details with other banks in safe and secured mode.
- Personal finance management
It shows the flow of money that where it is being spent and where it is coming from. It will also help in identifying where a customer can save their money by balancing it’s fixed and variable payments.
- Single platform
A single and common platform of banking and accessing all the accounts at one place.
- Debt management
A platform where a customer gets recommendations for better financial products that helps in choosing lower and best interest rates.
AI-Driven Predictive Banking
One of the most powerful trends which is going to emerge in coming years will be the Predictive Banking. AI-Driven Predictive Banking is a wider concept and a bigger approach towards Open Banking. Under this, the banking industry can integrate all internal and external data of their customers. With the consolidated data, they will build profiles based on prediction in real time. Also, financial institutions whether new, existing or established can provide advice for the future. This way of banking not only improves customers’ experience but also provides efficiency and security in their financial.
Fintech Startups move towards Open Banking
Financial technology has started offering wider range of banking services beyond payments and lending. It has the potential to change the way customer access banking products. These startups are good at helping customers in ease of using their banking activities.
- In 2004, PayPal began the open banking mechanism and launched PayPal API. It began its operations through third party and expanded all over the market.
- Another payment gateway is Razorpay. It expands into wide-ranging financial services by launching Razorpay X. It is a platform that gives an overall view of the financial health of the organization.
- Startup like Mint brought the concept of independent financial applications that combine multiple bank accounts and credit cards of customer. It provides the view of their finances and ability to compare various banking products.
Open Banking as the Foundation for Growth
The Open Banking is a big step for both banks as well as consumers. This banking has encouraged the competition among the financial institutions. It is giving more options to the consumers for managing their wealth that is the future of banking. It shares customers data in a safe and secured way whereas, incurs lower costs for the companies. In essence, Open Banking promises to create a new financial services ecosystem.