Open Banking
Candlefocus EditorOpen banking has been developed to improve the existing banking system, such as making payments easier and faster, aiding customers to take a more proactive role in managing their finances, and reducing the number of fees associated with banking, such as overdrafts and fees for international transfers.
Open banking strives to improve all aspects of banking, from customer relations and trust to the security of customer data. Banks and financial institutions must meet stringent security standards and customer data protection standards while also providing their customers with secured access to their financial information. Banks must also ensure that customer data is securely stored and shared with third-parties on an opt-in basis.
The benefits of open banking include increased customer control and transparency of banking services, more precise financial advice, easy access to bank information and services, and quick and convenient payments for customers. For example, customers are able to use their phones to conduct banking activities, including transferring money, quickly and securely. Open Banking also allows customers to compare different banks' services and fees, helping them to choose the best bank and services for their needs.
Open banking directly affects the customer experience and provides a more personalised and individual experience. Customers are able to access more accurate financial advice and recommendations tailored to their specific needs. Furthermore, Open Banking is not just for consumer banking. It extends to the corporate sector, providing businesses with faster, cheaper, and more secure access to services, such as loans and overdrafts.
Open banking will continue to grow, improve and innovate as customer demands grow and become increasingly sophisticated and as regulations such as the EU Revised Payment Services Directive (PSD2) mandate stricter security and data requirements. In the coming years, open banking could become the backbone of a new banking ecosystem that puts customers at the center of their financial careers.