Open Banking The Future of Banking
What is Open Banking?
Banking institutions are allowing third-party providers (TPPs) to access their application programming interfaces (APIs) so that TPPs and financial technology companies (fintech) can then build new applications and services or create additional services together with financial institutions.
Drivers and forces behind the Open Banking
Over the past few years, financial institutions have faced major challenges, and, at the same time, opportunities have arisen to shape their future profit pools.
Below are the main factors that led financial institutions to lead the path of innovation:
- Behavioral change of Customers and need: In many cases, changes brought about by digitization are a result of changing user behavior.
- Advanced technology enables it: Previously closed-ended systems have become open and networked thanks to digital technology, paving the way for Open Banking to flourish.
- Regulation fosters it: Regulation encourages innovation by explicitly naming ‘Open’ as a policy goal that all financial institutions should consider.
It is imperative to mention that one key factor to winning customers’ trust and providing better products and services is putting ourselves in their shoes and acting on key factors that would make the customer feel comfortable and relieved about embracing open banking practices. Transparency in data, processes, and policies, while still maintaining data security, is the key to success.
