Open Banking: Benefits of a Growing Technology
The journey of the digital transition in banking is going on around the world at an ever-increasing speed. After a series of pandemic-driven lock-ins, the importance of digitalization has gained even greater momentum. Open banking solutions, in particular, see fertile ground for growth and are already revolutionizing the relationship between financial institutions and their customers.
Very briefly, open banking involves a technology that aggregates all of a customer's financial information, even from different banks, on a single platform. Banks will thus share customer data with other operators, be they competing banks or fintechs, for example.
Remembering the definition of open banking is important, because behind the concept covers a myriad of benefits for both banks and consumers. Let's look at the different advantages of this financial management solution.
Reduction of operational costs
By centralizing all necessary information on a single platform, banks and customers can access, collect, and retrieve all data much more easily. Time is saved and, in the specific case of banks, work productivity is increased. Fewer resources are needed to manage customer banking information and, as such, costs are also lower.
Consumer protection and safety
The sharing of customer banking data between different entities can create doubts. Understandably so. But open banking is well regulated through two supranational directives, the Payment Services Directives (PSD) 1 and 2, which, among other measures, require certification of the providers of these services. So customers can enjoy the benefits of open banking in a secure and authorized data environment.
Ease of payment
With all banking information aggregated and properly organized in a common environment, customers can easily initiate all the payments they want without having to open multiple homebanking sessions for the same purpose.
New sources of revenue
By connecting different entities to share data, open banking technology promotes innovation and digitalization for banks. These entities will be able, for example, to optimize the online customer experience, speed up decision-making, and adapt their product and service offerings to each user. This is how profit potential grows.
Control and Freedom
The client of an open banking service benefits from significantly greater control over his or her accounts. He can easily aggregate, compare and decide on increased quality information and speed up bank reconciliations. The companies themselves gain greater autonomy in managing fiscal, tax and credit liabilities, for example, while establishing integrated communication with other entities or professionals.
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