The benefits of open banking for financial institutions and banks are plentiful. It expands and diversifies their digital offerings and allows them to develop a variety of products at an accelerated rate.
There are now many banks that have key areas of open banking worth paying attention to. Diverse aspects of open banking can be very lucrative. However, before diving deep into open banking and its most popular use cases, let’s take a closer look at some of the fundamentals.
What Is Open Banking?
The open banking system allows financial institutions and banks to access information about customers’ finances more straightforwardly. The exchange of data is possible through APIs or application programming interfaces. They facilitate communication between banks and financial institutions.
In open banking, existing services are improved and new ones are created, reducing costs or generating revenue. The new offerings are tightly linked to the existing financial services.
A Few Of The Most Popular Open Banking Use Cases
- Account Aggregation: Several financial service providers provide account aggregation, which involves using APIs to provide customers with a view of their various accounts. Account aggregation allows customers to view accounts from different providers on a single interface. Along with payment accounts, PSD2 provides access to credit cards, investment accounts, loan accounts, and combines consumer and business banking through a single interface.
- Personal Finance Management: Open banking has, of course, brought new possibilities to financial management and wealth management. In addition, open banking has opened up some capabilities within a PFM. Similarly, when a bank is connecting APIs across its business units and connecting them to APIs at other banks. Open banking has given customers more choice and provided providers with the opportunity to tailor their products. This has resulted in a proliferation of financial management products.
- Instant Credit Risk: With open banking, lenders have almost instant access to an applicant’s credit history. Assessing credit applicants traditionally involved gathering documents from multiple banks and institutions. This process slowed down credit services and negatively impacted the customer experience.
- Subscription Management: Subscription management services are still quite new as a complement to account aggregation and payment management. Creating insights and taking action is part of this service. Subscription management interfaces allow customers to manage their recurring payments, such as utility payments, mortgage payments, streaming services, and fitness memberships. Customers may manage recurring payments here, for instance, cancel unwanted subscriptions or be notified when a payment is due.
Opening New Accounts
The advent of open banking has made opening a bank account easier and faster. Banks can exchange data in order to match information such as an address, occupation, income details, name and date of birth, as well as credit history.
Since this can be done in a matter of minutes, the customer experience is much smoother and it has now become a competitive necessity. However, as several segments of the population are opening their first bank accounts through digital means, they may have high expectations regarding speed and user experience.
OpenPayd puts the customer’s convenience at the forefront. However, many businesses are yet unsure of how to leverage it, although open banking is adopted by millions of consumers across the globe. For that reason, our team enables financial institutions to make decisions much faster than they ever could, offering ways to save money. Get in touch with us to learn more about our account information service and get insights to make more informed business decisions!