Open Banking is generally known as the practice of sharing personal financial information electronically, under secure conditions that are both approved by corporations and by the consumer. In doing so, Application programming interfaces (APIs) allow Third-Party Providers (TTP) to access financial information efficiently which results in smoother, faster, and easier financial processes.
Examples of how Open Banking has already started to become implemented would be budget tracking apps on your device, or even through your bank that could be connected to checking or savings accounts. Other instances where Open Banking has been used when you don’t even realize would be purchases of a home or monthly payments. Technology is becoming increasingly prominent in daily financial transactions, and understanding how this affects your life is essential.
What can Open Banking do for you though? Open Banking is a huge aspect for not only banks but also TPP’s and regulators. It offers more personability and customization to its consumers in managing and borrowing money as well as making payments.
App developers have recruited the use of APIs to create more streamlined and simple platforms so that customers have an easier time understanding and controlling their spending. With the push towards more advanced and regularly used artificial intelligence in the business world, certain tools that may even be able to predict events in your accounts or suggest products to save you money have been implemented. But with that, some apps may not be recommending products and services in the customer’s best interest, but rather the bank’s or organizations’ best interest. So be careful and choose your tools wisely!
Not only does Open Banking make day-to-day finances easier to manage, but it allows for large transactions to be more accessible as well. Getting a loan has become much easier in that they need to manually gather information from a variety of sources for research is no longer needed as consumers can permit lenders to electronically access all the options and choose for them. This applies to smaller companies as well, not only for loans but drawing lines of credit. Lenders can pull your data with permission from yourself instead of the individual going through the hassle of submitting all the information needed.
But with the upcoming trend of Open Banking, the concern of privacy has become much more sensitive. With all the information going digital, tighter cybersecurity will be much needed and the public’s opinion on that may be hard to sway. But even so, the move towards Open Banking seems to be inevitable as the world becomes more and more electronically dependent.