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What the future looks like with open finance
Customers may be able to share a plethora of financial data with their financial services providers if the financial environment becomes more open. This includes information taken from their bank accounts, as well as mortgages, savings, and loans, giving them a complete picture of their finances.
With this information, a financial institution can provide a higher-quality, more personalised service that meets the demands of the customers.
There is a huge possibility to incorporate Artificial Intelligence (AI) and Machine Learning into customer applications, in addition to providing a holistic service. Open banking is based on the belief that banking can be moulded, and the traditional idea of a bank as a single-functioning entity is rapidly changing.
What are the challenges we need to address for achieving an open financial ecosystem?
Customer views regarding data sharing and data privacy are one of the most significant obstacles to open banking adoption.
To stimulate usage, safeguard customers’ data, and protect them against other threats, data sharing ecosystems require well-founded trust. Only by attaining a level of well-founded trust among all members can an open data ecosystem function efficiently. Market participants, whether individuals or businesses, may choose to withdraw if this is not done flawlessly.
To support data exchange, a strong financial infrastructure is required.
At a fundamental level, the availability of digital financial infrastructure is vital to the data ecosystem's success. A highly challenging enterprise, an open data ecosystem is dependent on the size of a digital payments infrastructure, the availability or absence of important aspects of a digital identification system for both individuals and organizations.
Implementing open financial data systems requires strict measures
If not adequately managed through suitable policies, regulations, and infrastructure frameworks, open data ecosystems’ innovation could worsen existing inequities and sources of prejudice or result in less-than-optimal outcomes for particular stakeholders. While the route forward is exciting, it also necessitates careful consideration of how to ensure that all players, as well as the ecosystem itself, benefit from the gains and not only a biased segment.
THE PULSE - VOL 01 - Q1 2022