Open Banking is far more secured, a better pathway for delivering products and services that enables the customers – consumers, Corporates and SMEs – to get a better deal, making the finance more transparent and supporting them to get the optimum share out of their money.
It is definitely proving as a global movement, and there are definitely certain nations that are pioneering this movement as well as the paradigm shift that will support competition and innovation to the Financial Services industry. This may sound scary, but banks embracing these latest challenges have an opportunity to enhance customer experience and shift focus to become more consumer-centric, rather than traditional bank-centric.
The surging optimal utilization of APIs by banks to neutralize and modernize the current mix of both traditional as well modern banking landscape is striving and is predominantly driving the banking process swifter, transparent, economical, secured and most trustworthy amongst general consumers as against the traditional legacy systems.
Developing a global Open Banking Standard would directly set the framework for widening the security as well as the consumer protection as data sharing rises. The general believe is that 2020 is going to be the year of enlarged user adoption, when more individuals and commerce utilizes an ever-growing number of Open Banking-enabled products. This has the utmost potentiality to pave a path for Open Finance, which can include more economic products and services beyond just payment accounts.
In 2018, European banks entered a latest era as banks were tasked with delivering safe and secure account access to regulated third parties. The United Kingdom’s Competition and Markets Authority (CMA)’s Retail Banking Market Investigation Order 2017 found out the Open Banking Implementation Entity (OBIE) to deliver Open Banking.
Since then, there has been an unparalleled level of collaboration amongst banks, FinTechs, regulators and consumer representatives to form an Open Banking treaty a reality. There is now an overflow of 100 authorized third parties in countless stages of bringing Open Banking- enabled propositions to plug.
From our perspective, which of the CMA, this provides us real confidence that Open Banking goes to still grow and deliver on its potential to rebalance the market in favour of consumers? The work of implementing the APIs (Application Programming Interfaces) isn’t yet complete, and yet a million UK users have already connected their bank accounts using the Open Banking-standard APIs. most significantly, the number of consumers is growing strongly, quite doubling in six months.
This level of consumer power and engagement at such an early stage of Open Banking is extremely encouraging. As we enter the ultimate stages of implementation, we’ll see more new and innovative propositions enabled by Open Banking delivered to market, which can, in turn, boost user involvement and awareness. These intentions are going to be influential in guiding the consumers, SME’s and other businesses in managing their finances better, enjoy cheaper credit and in getting better loans.
Today, Open Banking relates only to payment accounts like current accounts and credit cards. But the core principle of Open Banking is that the info the bank holds on the user belongs to the user and to not the bank. This core principle can and will be applied to other products. within the future, other financial products like savings, mortgages, insurance and pensions should have their Open Banking moment under the banner of Open Finance. Going forward, users could see all of their financial relationships in one place and conveniently use that information to form better decisions.
In short, if you give users access to their data, then you rebalance the market in favour of the buyer. You enable greater competition between incumbents; you enable innovation from new entrants and incumbents; you enable greater convenience for consumers; and crucially—probably most crucially of all—you enable greater engagement by end users. Lack of engagement in financial services is one among the most important problems we face as a society, and Open Finance might be a key enabler.
It is encouraging to ascertain that our success in implementing Open Banking and ambitions for the longer term of Open Finance are attracting the eye of governments and regulators as tools for bringing competition and innovation to financial services. as an example, innovations that are already on target include the Pensions Dashboard, which can help consumers hunt their pensions and consider all of them in one place.
With quite 99 percent of the UK payment-account market under one API standard, the UK is taken into account to be a worldwide pioneer in Open Banking. It’ll be interesting to ascertain how Open Banking evolves into Open Finance over time.
Preliminary discussions are ambitious in scope, covering savings, mortgages, general insurance and pensions. They also repose on the training and infrastructure of Open Banking to make sure real-world delivery. Indeed, Open Finance will likely be swifter in its implementation than Open Banking, which required significant infrastructure to be created from scratch. Repurposing the prevailing Open Banking infrastructure can reduce time and price.
There is a way of inevitability of Open Finance becoming a worldwide phenomenon. User expectations during a hyper-connected world are exploding, and regulators are increasingly coming to terms with citizens’ data rights. While Open Banking has so far been largely pioneered by the UK.
However, so as to first secure the success of Open Banking, regulators, banks, and third parties got to make sure that the ecosystem remains healthy and thrives. we’d like to still collaborate and guarantee harmonisation across technology, authentication and liability. With these foundations in situation, we are optimistic that Open Banking will succeed and pave the thanks to Open Finance.
Thus, there is no doubt that The Open Banking Standard strengthens the role of technology in finance and will prove as a foundation step for both banks and consumers. It will also support in encouraging productive competition amongst financial service providers, sharing data more securely and giving consumers better wealth management options.
There’s a large number of financial institutions with the tools and resources needed for adapting to the constant technological changes we still see within the industry. Within the next few years, it’ll certainly be fascinating to observe the developments of the Open Banking Standard within the UK and the way other regions will begin to adopt similar policies.