Open banking provides financial institutions' data through the use of Application Programming Interface (API). It opens the way to new products and services that could help customers and organizations get a better deal. API helps to drive speed and cost-effectiveness compared to traditional legacy systems. With the open banking system banking data will be shared through secure open APIs which helps customers more effectively manage their wealth. This initiative will enable customers to compare and save on their accounts and have access to more personalized resources for making potential banking decisions.
The Impact of Open Banking:
1. The democratization of banking services: Open banking enables people to have bank accounts who would normally be unable to access traditional banking services. Democratizing the banking in this way implies a wider economy empowering segments of society who had limited participation in the economy.
2. Data control: With open banking, customers can provide or withdraw consent for access to personal data and customer permission becomes currency. Because without customer data it is not able to provide competitive services.
3. Consumer choice: Open banking can offer better product and service choice and pricing. This is made possible by analyzing consumer data and making customer behavior predictions.
4. Rethinking business models: Banks can create an ecosystem of reliable strategic partners and sharing revenues on the products and services to the customer.
5. Single view of finances: Open banking will allow an application to pull information from all the banks, and show it in one place. This could help track spending accurately.
Open banking is coming with a plethora of opportunities and becomes important to embrace these technological innovations to deliver for increasingly tech-savvy consumers.