Technological advances have significantly influenced globalization, making us more open to each other. This concerns business processes as well, where digitalization spread the borders of communication. The word ‘Open’ also refers to the finance sector, where such term as Open Banking became a part of the FinTech future.
What is the Open Banking? Are finance domain and Banks open for Open Banking? Here is the MicroMoney‘s expert review.
According to McKinsey review: “Open banking can be defined as a collaborative model in which banking data is shared through APIs between two or more unaffiliated parties to deliver enhanced capabilities to the marketplace.”
In other words, thanks to data sharing, we get improved customer service, wider market coverage, and more revenue streams.
Anton Dziatkovskii — Founder of MicroMoney
How does the Open Banking become a future of FinTech?
Everything started in the UK when its government was searching for an easy way for financial service providers to reach their customers with a help of banks. The Open Banking became the solution, where established Banks share data to third parties in a secure way.
The Open Banking makes it easier for consumers to compare various banking services, and details of current accounts. As well as other data sharing like providing details about branches or ATMs. Customers will get benefits as well. The Open Banking will improve a personal finance management, where they can view and manage their money in a more convenient way, as well as have all accounts details in one place. This technology also improves debt management, where customers get the overdraft alerts and different recommendations that help them pick the best interest rates or overdraft charges.
The businesses also receive its benefits like getting tools to help with cash flow management, and accounts.
Is this safe to share your data?
Data sharing always sound tricky, but when it comes to sharing your personal bank details, it sounds even more confusing. It is still something we can’t fully rely on, and data protection is on the spot line to date. Are you able to open your personal details and let your bank to share it with the third party in order to get the best financial services, like loans, for example?
In the world where almost every of our action goes digital, why not sharing banking information. Especially, if it brings us more benefits and General Data Protection Regulation makes it safe. According to the latest EU regulations for Open APIs, banks can open their data to third parties and it’s totally safe. With the Open Banking, your data is encrypted and you can manage the allowance of it. What is also important that only companies under Financial Conduct Authority regulation or other authorities can access your data. If you want to protect your data, check who you share your data according to your country’s regulations.
How Will Open Banking impact the future?
As you see, the Open Banking is a new word in the world of Finance. As it was mentioned, this technology helps to increase customer service in finance service, and get the best recommendations for its customers. The Open Banking also influences the technology progress itself. Data transparency is necessary for third-party developers to create various technology products or services for the finance sector. This consequently will change the way we save, borrow or spend our money.
Free and secure exchange of data improves FinTech domain. In the world, where globalization process runs very fast, and it reflects the way we get and manage our money, we need companies that adapt to these changes.
For example, if you want to take a loan in your bank, the process can take too long and too much bureaucracy. In some cases, you can’t do it in your country or you are an unbanked person, so what is the solution? New FinTech companies can help in receiving the loans where Open Banking also plays a significant role.
MicroMoney has some common key points with the Open Banking. We both focus on FinTech area and Big Data. From MicroMoney perspective, by sharing Big Data, we can provide our customers with better service which is different from banks, we serve new customers who were unserved before. So, in the fast-changing world, people can get access to loans more easily than it was before.