The Value That Open Banking Brings to End-Users

The Value That Open Banking Brings to End-Users

The first wire transfer of funds happened in 1872. Since then, so much has changed – the world adopted ATMs, telephone banking, internet banking, contactless payments, mobile banking, and so much more. And today, we are further making way for a newfangled approach by way of human-centered banking: open banking.

Open banking is a part of financial technology that draws on open APIs and third-party developers to build applications and services that bring about greater financial transparency through open source technologies.

Open banking has fundamentally revolutionized the financial sector. It has made traditional banking services simple, efficient, and convenient, removing additional costs. Markets led by the UK and the EU have already passed open banking regulations with more than two million users of open banking-based products in the UK, a number that has doubled since the start of 2020, despite the disruption caused by COVID-19. Other markets, such as Canada, New Zealand, Australia, and so on, are also on the road to open banking.

Customer demand is now undertaking a paradigm shift, and the expectation from banking models have increased drastically. They want seamless, intuitive, and value-added services along with safe and secure systems and procedures. With more customers understanding the value of their data, banks are forced to opt for newer working models.

Additionally, it unlocks a new way of functioning: for Third-Party Providers (TPPs) to aid banks and companies in providing innovative solutions.

The primary beneficiaries of the open banking landscape are the end-users. The quality of services provided through the spectrum of open banking to customers has improved drastically in the following ways:

  • Ability to track changes in bank accounts and receive regular notifications without the need for authentication every time.
  • Complete automation when it comes to analytics and budgeting recommendations.
  • Execution of transactions via a single interface, even if made through different payment modes.
  • Choosing optimal payment methods depending on the offers and discounts available.
  • Passing online verification when opening a new account/register.

For banks, open banking can help strengthen customer relations and be considered safe and secure data holders. Their profitability will depend on the ability to fulfill customers’ needs. With open banking, banks can cater to customer needs in a future-proof and agile method.

Open banking also involves educating and engaging customers about the technicalities and the value of their data. . Such transparency will give them access to better services and improved pricing.

Since the concept of open banking is relatively modern, a lot of end-users are hesitant to use these services. It is now up to the government and financial regulators to raise awareness and encourage users to opt for open banking services.

Jim Marous put it aptly: “Having a customer-centric culture is more than just a good thing – it’s become a matter of survival.”

You don’t need a Magic 8-ball to tell you that the time for open banking is now. The question is, have you made the shift?