Open banking is becoming a significant source of innovation that will reshape the banking industry. By incorporating APIs and real-time data sharing schemes, open banking is changing to open finance and how data is operated. The retrospective view of the banking industry reflects the monopoly of banks over customers’ data. However, technological development and the aim to amplify competitiveness between financial institutions exhibited a renaissance of open banking letting non-banking companies offer banking products and services to the market.
Europe claims to be the welcoming ground of the Open Banking model due to its PSD2 (Payments Services Directive) and the UK’s Open Banking Standard. Various countries and the regulators entitities, are acquiring their own approaches to enjoy the potential Open Banking benefits: improved customer experience, new revenue streams, and a sustainable service model for traditionally underserved markets.
In the UK Open Banking Working Group UKI, nine central banks have set up their Competition & Markets Authority; they became the Open Banking Implementation Entity (OBIE) in 2018. Singapore, known as the early adopter of Open Banking, launched its “Finance as a service” API playbook with 270 open APIs published by Nov 2017 – Forward regulation by the Monetary Authority of Singapore (MAR).
Latin America is also working on its regulations to make the ground fertile for open banking. Amidst the new compliance regulations, Colombia has been proposed a public-private methodology to have an open architecture in all financial projects and services.
Financial institutions are required to start formulating their strategies for API-based open banking. This analysis will help them gauge internal capabilities to embrace the futuristic solution model. In fact, this model will aid corporates to get a centralized view of their finances under one roof. Below shared are the paramount considerations that need to be addressed:
Banks embarking on this journey to develop API-enabled services and products should produce a meticulous roadmap. The well-defined map will assist financial institutions to remain ahead of the curve and produce demand-driven solutions while maintaining the principles of customer-centricity, security, and trust.
Corporates and consumers are the benefactor of the open banking services to manage their finances under one roof. Open Banking builds a niche between third-party financial service providers, financial institutions, and customers to access personal and financial information. Before initiating services, customers need to grant access to sharing of information, usually via an online consent form following a terms and conditions agreement. The third-party providers then access the relevant shared data via exposed APIs.
Many benefits can be realized through API-led open banking.
Amplify Customer-Centric Approach:
Open Banking holds the potential to foster both traditional banks and new players as digital banks, neobanks, to provide innovative experiences and products to consumers and businesses alike.
Improve operational efficiency:
If data is the new oil, open banking is considered the engine to increase transparency around every decision, transaction, and communication.
Real-time Treasury Management:
Companies can go beyond data aggregation and cash-management recommendations to initiate payments, enabling them access to account balances and transaction data in real-time and on-demand.
Generate higher profitability:
Open banking offers a “plug and plays” model wherein banks can provide a full range of services at lower operating costs, increasing profits.
Increase interoperability:
Open banking can consolidate all banking data in one app wherein customers can view, edit, and control all their accounts and products with a few clicks.
Beyond banking:
Open banking data can lead to the provision of services beyond banking that helps corporates by providing peer comparisons on market share, utility spending and other aspects of running a business.
Centralized Financial Information:
An open banking model facilitate corporates to experience centralized view of their finances in order to provide structure and oversight to the future operational processes.
At ECS Fin, we help financial institutions to enable Open Banking through data exposure with their own APIs. At the same time, we allow the use of third-party APIs published by our applications and their modules. This enables its clients to unlock operational capabilities, manage risk, improve efficiencies and allow the bank to become a trusted partner. In the same way, we support corporates in making the best use of Open Banking thanks to the unlimited possibility of managing multiple connections and services on the same platform.
Let us help you make complex business processes simple, smart, and secure!
At ECS Fin, we help financial institutions to enable Open Banking through data exposure with their own APIs. At the same time, we allow the use of third-party APIs published by our applications and their modules. This enables its clients to unlock operational capabilities, manage risk, improve efficiencies and allow the bank to become a trusted partner. In the same way, we support corporates in making the best use of Open Banking thanks to the unlimited possibility of managing multiple connections and services on the same platform.
Let us help you make complex business processes simple, smart, and secure!
ECS Fin is an engineering enterprise that specializes in process optimization. We design software solutions with a systems approach to transaction processing.
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