The concept of open banking* – where consumers can choose to share their financial data with providers outside of their banks – is relatively new, at least if you consider how long banking has been around. (The banking industry has been tightly closed since forever).
But it’s quickly gone from vision to a rubber-stamped reality – with many countries around the globe now having (or currently creating) regulations to guide how this open banking thing should work.
If you’re wondering what the fuss is all about, it all comes down to the importance of data, and being able to use it appropriately. And in this one-click, mobile-first, fast-paced, digital era – data is a big deal.
How do people benefit from open banking?
The basic idea behind open banking is that consumers should have ownership over their financial data, instead of the financial institutions that manage their accounts and assets.
Before, only banks had access to this data, which didn’t give people a lot of options, and often left them tied in a lifelong relationship with their account holders. But with open banking, consumers can share and use their data as they want – often as a way to get valuable new services or more convenient digital experiences.
So let’s say someone is very happy with their bank, but wished their mobile banking app offered a digital subscription management service. With open banking, they don’t have to switch banks, or settle for using a spreadsheet to manually track their subscriptions. They can stay with their bank, and use a third-party service that has the subscription management features they want.
They can choose between a wider range of financial services and go with whoever offers the best experience. They can use one app for budgeting, one for tracking their investments, and another for managing their subscriptions. To each their own.
How do businesses benefit from open banking?
As mentioned before, data is a big deal – and being able to use it opens up a lot of new possibilities for businesses and entrepreneurs everywhere. If data is the new oil, what it’s fuelling is innovation.
It doesn’t just make it possible for businesses to offer new services that wouldn’t have been possible before – it also lets them improve their existing offering.
They can use the data in many smart ways to not just give customers a more unique, personalised experience, but also solve different pain points throughout the customer journey.
Things you can solve with open banking
If you’re wondering what types of new digital experiences we’re talking about, or how financial data can be used to solve pain points for businesses, here are a few examples of how you can use open banking to bring value (for business and their customers):
It can simplify onboarding for financial services
It can streamline the KYC process
It lets you provide personalised financial coaching
And there’s a lot more. This is just a sampler of what’s available with Tink today.
*Please note that we’re not talking about the UK regulation known as ‘Open Banking’ (as a proper noun), but rather the general concept of open banking as an industry movement.