michael bedwell
by on February 20, 2021

The open banking model is the one that allows banks or other financial entities to share information about their users, always through their consent. The foregoing within the framework of compliance with the provisions of the personal data protection law.

The objective of this model, which is based on the adoption of technologies such as APIs, big data, and analytics, is to move from the traditional system in which financial entities are the owners of their clients' information, towards a system in which that consumers have control over their financial information.

The digital transformation expert added that moving forward in open banking will allow banks and financial institutions in general to reach users and customer databases much larger than they currently have.

According to a report by Juniper Research, the number of Open Banking users are predicted to double in 2021. It was 18 million last year in 2020 and now in 2021, it is expected to be 40 million.

Benefits of Open Banking:

Also Read - What is Point of Sale? Everything You Need To Know

Open Banking places the financial sector at the forefront of current demands, allowing them to take a step towards modernization and putting the customer at the center, which brings several advantages:

  • People have greater control over their information as they decide to whom to give authority or not in the handling of their data.
  • The client can decide which financial products he wants to have and with which entity. In this way, you can find products that best suit your needs in various financial companies.
  • By knowing and analyzing the data provided, providers can offer more personalized services and appropriate offers according to consumer behavior.
  • Create a financial institution’s own and interconnected ecosystem between financial and non-financial institutions.
  • Credit approval times are reduced. An example of this is when you want to apply for a mortgage loan, in this way what could previously take days between a study of credit behavior and paperwork, can now take less time, thanks to the fact that the financial history of the person is easily available.
  • Acceleration of technological transformation in the banking sector. Financial entities are called upon to constantly evolve that responds to customer needs, which brings with it a more accelerated development of digital tools and software that adapts to new functions. That is why many entities are betting on improving their digital services to improve the user experience in banking portals.
  • To achieve these results, financial entities can make use of tools such as Artificial Intelligence, Machine Learning, and microservices for the management and correct analysis of their users' data.

However, the implementation of Open Banking also poses a challenge for banking entities in terms of managing their users' information, limiting the data provided to third parties, and exposure to cyber-attacks. Therefore, the development of software and APIs with adequate structures should be a guarantee for users.

As we can see, Open Banking opens up multiple possibilities for the development of the financial sector, which calls for true innovation in the services offered that can bring benefits to both banks and customers.

Also Read - Top 10 Cheapest Credit Card Processing Companies for Small Business

Posted in: business
Be the first person to like this.