Where is banking heading with open bank

Within the banking and financial services sector, a business model was imposed that places the customer at the center of the provision of services and products. In the framework of multichannel environment with immediate availability, the requirement combines other factors such as getting to know your customers, as well as detecting and anticipating their needs.

In this context, Open Bank appears as not only an opportunity for the banking sector but for consumers in relation to providing greater comfort and control on their financial services.

What exactly is Open Bank?

Open Bank is the opening of information and bank data from clients, with their consent, to other platforms, whether other banks, fintechs or companies to enable the expansion of the offer and novelty of services.

In this new diagram, the entities are connected via APIs (Application Programming Interfaces) that is a set of protocols and tools enabling the connection of two platforms. In this manner, the information from one company flows into another company in a safe manner. In addition, the ownership of data is transferred to the individual client who may authorize or not authorize the use to other organizations to enable the use of its banking products via third-party Apps.

There are many advantages for all industry players. In the case of banks, you can monetize data and develop proposals in less time, and detect fraud, credit risk or the payment capacity of the clients early in advance. This is translated into more efficiency and lower costs. At the same time, companies can use the app to generate new and agile services. Finally, users transform themselves into the owners of their bank data, and access a larger variety of services. The challenge currently addressed is to build trust in this new business model.

Open Bank use cases

The examples of Open Bank implementation for consumer banking are numerous. One of them is Play Digital fintech for payment methods launched by Galicia, BBVA, and Santander in Argentina enabling the remittance and receipt of money to and from any contact stored in the cell phone without having any CBU or open an online account. Among other utilities, the possibility to process transfers between clients and QR retail payment capitalizing on technological advances, the greatest security, and accelerated implementation of digital banking. It will also accept the specific promotions of each bank, and will enable services to open new savings, insurance, capital and fixed-term accounts.

In a similar line, the Plunzo platform enables the consolidation of a similar screen displaying all accounts and credit card transactions from different banks, categorizing all purchases per sector to know about expenses incurred in supermarkets, entertainment, and restaurants, etc.

The real estate sector is one of the most interested in the implementation of open banking. The availability of information from potential clients will enable the analysis of their financial solvency and the signature of mortgages within an online platform. Many purchases and leasing processes may be conducted online at any time, which would eliminate the need to send scanned documents and the physical presence of individuals.

The PwC “Fintech and Banks” consulted the opinion from banking operators in relation to emerging technologies, and Open Bank is considered to be the most relevant sectors to invest in the next few months together with data analytics, biometrics or identity and mobile management.

93% of surveyed respondents believe Open Bank will be the determining factor for the financial market in the next five years.

Fuente: PwC

In conclusion, with innovation and technology use in Finance, Open Bank enables to share information with other companies with the authorization from the consumer to a broad variety of data facilitating the development of new products, higher competition, inclusion, and a better experience for clients.

The adoption moment is now. Infocorp enables your organization to maximize open banking benefits.