New Pathways to Digital Transformation – With Open Banking
nehachauhan | Updated: August 12, 2021
Open Banking brings forth many new ways to revolutionize financial services except just traditional banking. It can provide much-needed benefits to consumers by collating and combining their financial products, offering actionable insights into their spending habits, offering recommendations on important financial decisions, automating administrative processes, and even providing new ways to pay. Further, because of regulatory changes (like PSD2, GDPR, PDPA, CDR), many traditional organizations have to reevaluate their business models and strategies, leading to more accelerated technology adoption in the financial world.
Through this article, let’s look at some primary use cases of Open Banking that allow it to enhance the quality of digital life. We’ll also talk about how Open Banking truly provides 360-degree benefits by keeping everybody – from consumers to financial institutions to fintech industries – covered and benefitted!
Open banking use cases to enhance the quality of digital life
Here are some use cases of Open Banking that are already being adopted across the globe, and their benefits are being felt by all the elements of a financial network.
- Personal Finance Management Tools Third-party providers can provide customers with intuitive tools to help them take care of their financial portfolio. Some important tools and features can include automated savings, investment tracking and aggregation, and product switching.
- Seamless Payments With Open Banking, direct account to account payments become extremely easy, reducing the cost by completely eliminating card processors. It also allows financial institutions to increase the attention and time it has from customers enabling them to execute all their transactions from one place.
- Account Aggregation Providing customers with the ability to consolidate all of their financial information on one platform is an extremely important use case of Open Banking. It allows customers to stay on top of all their financial actions from one place. This includes aggregating the savings, current, deposit, loan accounts in addition to your credit cards. With such comprehensive information in place, banks and financial institutions are better positioned to understand the customers’ overall financial requirements and behavior.
- Product Comparisons Many-a-time customers want to apply for a loan, or want to purchase a financial product, but they often don’t know how to select the right one. Open Banking uses open APIs and advanced data analytics to recommend just the right products to customers based on their search history, spending behavior, and financial constraints!
360-Degree Benefits of the Open Banking Model
The above-mentioned use cases are by no means exhaustive. It should be noted that Open Banking truly holds power to improve the quality of digital life for one and all. Let’s look at three main components – consumers, financial institutions, and fintech – and how Open Banking provides unparalleled benefits to them!
- Simplified payments – from any device
- Ease in currency exchange and remittance
- Utmost customization and personalization
For Banks and Financial Institutions
- Easy collaborations
- Futuristic outlook for banks
- Improved customer engagement and satisfaction
For the Fintech Domain
- Staying on top of customer needs and expectations
- Helping banks extend their services
Open Banking is slowly but surely seeping into different financial services and institutions, and is making its benefits felt, too. It’s about time that more legacy institutions took the route of Open APIs to make things easier for themselves, their customers, and everybody involved!