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To many of you, open banking might be a new concept, and some of you might already be using and benefiting from it. It may appear to be unstable to some users at first. However, it is quite the opposite.
It is a savvier and more convenient way of making financial decisions, sharing your financial information with traditional banks and third-party providers such as different apps that make managing finances more accessible and more flexible.
Open banking is a secure and authorized way of sharing your financial data electronically only with customers’ approval. Application Programming Interfaces (APIs) allow Third-Party Providers (TPPs) to gain access to each customer’s financial information, which can promote the development of apps and other services.
Moreover, open banking provides consumers with more options to manage their money and make payments. With the help of open banking and APIs, two or more parties can access banking data. The prime goal and idea behind open banking is to provide a better consumer experience.
The Start of Open Banking:
Open Banking began in Europe and UK in 2016, with one year at the hand of central banks of the country to create a viable open banking API platform to assist the growing demand for financial transparency and security. And as a result, open banking came into existence and has profited many individuals worldwide.
Later, many other countries like the United States, Australia, and China are developing different Open Banking systems for better financial assistance and are felicitating many individuals today. However, they still haven’t gained stability and lag behind European analog in many ways.
How is Open Banking Helpful?
We all know how the world of finances has evolved, and now each business and market revolves around technology. This means that even the banking system has to adapt to the digital era. Hence, open banking has now replaced all operations that required bank visits to electronic devices, which allow transactions from anywhere at any time. Here’s how Open Banking is helping customers as well as banks:
Provide a clear view of all your finances:
Open Banking allows consumers to view all their financial data in one place without much effort. This collectively helps individuals make better financial decisions and maintain a budget.
Allows quick and direct payments:
One of the most convenient things about open banking is that it allows you to make direct payments through your account, anywhere at your convenience. You can shop online, transfer money, make payments online at any time.
Better customer experience and improved digital agility:
Open banking provides customers with financial freedom, which allows them to have a better banking experience. This means they won’t look for alternatives as long as they are satisfied. It also improves digital agility, as it improves security, transparency and makes it easier for banks to leverage their data.