There are many benefits of open banking for customers, including openness to innovative services.
Structurally, it is difficult for banks to be innovative because they must be quite conservative. The development of IT projects in banks generally takes place over several years. Open banking brings a sense of what must remain over a long period.
Open banking improves the possibility to make a long process into a short one. Open banking provides an innovative Fintech ecosystem for customers.
What exactly is open banking?
Open banking can be seen as an awareness of the need for a business transformation, making the bank no longer a target, but a means to achieve broader goals in moments of life. This is achieved through two visions:
- On the one hand, the open “bank as a service,” which exposes the bank’s services to an ecosystem.
- And on the other hand, the “bank as a platform.”
With open banking, you enable third-party software providers and other banks to build new, customer-centric financial applications and services. This provides customers with control of their financial data.
Additionally, customers allow other third-party organizations the right of entry to their data and fuel innovation in the Fintech industry.
Benefits of open banking to customers — delivering services…
Open banking delivers services to customers while assuring their assets are well preserved by banks. Openness brings opportunities to the customers for the co-creation process to offer services that are designed by customers. This specific service could never have been developed by the bank in such a short time frame.
Engaging the customer in the co-creation process is another perk of open banking to customers.
Above all, this opening allows customers to no longer consider the banks as a sort of an indispensable part of their life. With open banking, the bank can disappear as a mainstay in the customer journey and process. This is a fact with the use of payment for e-commerce and other vital uses available.
With open banking, you can make a new innovative process without actually “seeing” the bank. In the end, you only use the bank as a service.
Importance of security
As a point of security, with open banking regulation, you have a guarantee that the security of the Fintech is the same transaction level by the bank.
APIs represent a real advantage in terms of security. Without an open banking API, the startup that is developing new services will need to access data to customers such as the open banking API with screen scraping that catches the screen. The data of the customers will, after that, be stored especially in an unsecured cloud.
With an open banking API, we can regulate the use of the data on top of security and it won’t be lost in the cloud. Axway is the only API provider that has EL4+ common criteria.
This is the maximum-security level for all civil applications. We add extra security for the customer and the ability to use innovative services with all the security of the bank’s infrastructure.
Open banking does not yet bring additional revenues, but it does help to limit customer attrition by providing, thanks to the ecosystem, an answer to the expectations of customers in need of digital services.
“We need banking. We don’t need banks anymore.” Bill Gates (1997)
Banks will continue to provide services but in a different format. They will no longer be in front of the customer and will be integrated into digital processes, along with the ability to interact with customers in the future. Customer support as we know it will most likely disappear, leaving you to interact with Botts and other digital formats.
In a few years, it will be natural to interact easily with Alexa, etc. A new generation is on the horizon and there is a new shift towards this model.
The bank is not ready to provide this service just yet. The good service will come over time. Thanks to open banking, a new opening of interactions will be available with your representative.
Open banking is part of Open Everything. It’s inevitable, and it’s in line with a broad business platform in complex ecosystems. The real question that banks must now ask themselves is what is their role in the ecosystem?
Will they be API service providers in a large API marketplace, or will they know, thanks to the introspection of their assets, how to be at the center of this ecosystem, and become the operator and provider of the platform? This is the real question.
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