How Open Banking is Uncovering the Shroud of Consumer Experience

Shefali Vasave | May 26, 2022 | 306 views

How_Open_Banking
The future of financial services is here, and transparency is at the core of the evolution. While technology, as with other industries, is at the center of the transformation, the unfolding face of finance is fueled by more than just innovation in technology.


Putting the Consumer at the Heart of Banking

Open banking is the latest advancement to come out of the crucible of technology and growing consumer demands. Open banking is the practice of enabling third-party financial solutions providers complete access to the consumer financial data stored by banks and non-banking financial institutions. This is executed with the help of application programming interfaces, or APIs.

The concept of open APIs has been around in the form of standard web APIs that provide limited access to consumer data to IT departments of financial institutions (FIs).


How Open Banking Aims to Raise the Bar?

Currently, several process challenges are hampering customers’ banking experiences across the board. Some of these include lack of proactive customer service, lengthy resolutions, and delayed support.

Open banking will get the ball rolling for new and small banks to compete with larger, established banking institutions. The increase in competition, transparency, freedom, and clarity is aimed at empowering consumers to seek out comparisons and customizations in financial services. For instance, through open banking solutions, consumers can easily access details on interest rates, banking fees, and other costs associated with a financial product or service.




What’s in it for Financial Institutions?

Any new financial and banking concept must be lucrative for it to be sustainable. So, it wouldn’t be unwise to ask how it benefits financial institutions of all shapes and sizes. While the open banking practice is customer-centric at heart, it has several benefits for everyone, from large corporations to small banks.


Increasing Traction for a Wider Range of Products and Services

Open banking will offer next-generation analytics capabilities that will set the ball rolling for banking institutions to cross-sell their products. By storing and managing all banking data on one platform, organizations will be able to optimize business resources while personalizing cross-selling and upselling offers to customers.


Garnering Clear Insights to Inform New and Better Business Decisions

Consumer research will no longer be needed for rolling out new products and services. With a holistic view of the banking customers’ data at hand, FIs can drum up their investments and make better business decisions.


Gaining an Edge Over Competitors with Much Lesser Market Research

Open banking allows fintech companies and other financial institutions access to data. But in addition, it also allows institutions to communicate with each other, which means being able to diversify and offer financial products that are a departure from the usual offering. Even then, FIs will be able to mold their solutions to meet the most urgent challenges of customers.
Preparing for the Inevitable Disruption

Whether or not you’re looking to adopt the open banking system, it is on a path towards disruption in financial services. Where FIs have been traditionally closed in order to maintain security, open banking is delivering iron clad security and privacy without the restrictions. Getting a peek into a rich set of consumer data is the best way to create valuable offering that uplifts traditionally banking service to be innovative and customer-centric and thus sustainable and effective.

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