Financial institutions have long been accumulating precious data about customers and their transactions, without taking full, or in some cases any, advantage of the effective value. If this data is utilised right, financial institutions can narrow down to an individual customer’s favourite restaurant or coffee-shop and this is just the start. Financial institutions also capture non-consumer data such as their meta-data related to cash machines, branches and their locations, the exact number of loans, mortgages, and different types of accounts and volumes of transactions. With all the information that the financial institutions capture, it would not be very difficult to analyse an individual customer and offer relevant products and services
With an estimated 45-50% increase in access to additional customer data and 65-70% reduction in time to market, open banking is undoubtedly one of the recent buzz words in the Fin Tech industry. Open banking is expected to increase revenue by at least 20-30% for financial institutions, in the short-term. These statistics carry the Fin Tech industry towards innovation in banking and payment services, by simplifying it for customers, banks and other third-party service providers to connect with each other in a secure manner and capitalise upon the opportunity.
Open Banking is a platform with a network of financial institutions and services available through Application Programming Interfaces (APIs). Practically, open banking is all about securely unveiling a bank’s data so as to incorporate a variety of financial services and so help customers with a better user experience and the most relevant choices. The driving force of open banking is the revised Payment Services Directive (PSD2), a European directive to boost competition and the variety of products and services in banking, including the payments space.
This whitepaper focusses on how financial institutions and banks, implementing open banking, are attempting to manage accumulated data, build transparency and yet preserve customer rights.
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