The year of Open Banking
The banking industry is having to deal with shifting sands due to Covid-19, forcing banks to look again at their product offerings, and customer relationships. This could now be the year for banks to build on the Open Banking framework.
With more than three million people, and businesses using Open Banking in the UK, even the pandemic has failed to stop the numbers doubling since 2020. Open Banking looks here to stay.
What is Open Banking?
Open Banking, provides a secure way for banks to share financial data and services with third-party providers with the consent of their customers’. Using an application programming interface (API) two or more third-parties gain access to a consumer's banking data.
Budget planners are an example of Open Banking in use. A customer can connect their bank account to a budgeting app, and they will be recommended financial products, based on data from that person’s bank account and credit cards etc. helping them make better financial decisions. This information is only made available through the API, when permission by the consumer is given.
Importantly, Open Banking holds the potential to create a single, unified platform for people to manage every money-related aspect of their lives.
By sharing customer transaction data with third-parties banks can offer personalised recommendations to customers in real-time. The advantages for the customers are it allows them to keep a track of their outgoings and balances, and pay directly through their bank account when making online transactions.
By improving the payment experience and approval ratings for transactions, this can help build a better banking experience. At the other end of the transaction, merchants processing costs are reduced.
Open Banking future
The UK has been the world leader in Open Banking since the law was passed in early 2016, and the ongoing digitisation of industries, and the demand from consumers for speed, accessibility and easy payments, combined with the pandemic is driving the early adoption of Open Banking.
As Covid-19 has shown us, the demand for online and mobile solutions is going to be the driving force for Open Banking, and the technology business is working with banks to build systems to speed up the digital transformation of the banking sector.
This will open up room for innovation, and developing new banking products suited to client’s needs. The ability to give improved financial advice to clients will improve brand loyalty.
The convenience and personalisation provided by Open Banking will help businesses in the future, with new innovation speeding up their day-to-day transactions.
Is Open Banking Safe?
All Open Banking service providers have to comply with data protection rules, and always provide the information of what data will be used. Only apps that the consumer has given consent to, can access their data.
For more information on how Open Banking can help your business to assess customer affordability.
Contact: Chris Meyer
Phone: 07854 380900