vritti
Mobilution
September 2017
5
By adopting technology to deliver financial services, banks have
always grown: be it credit/debit cards, ATMs, core banking systems
or online commerce gateways. Both financial institutions' and their
customers' lives have improved through faster and more convenient
services, and banks were never threatened by technology, till recently.
—- By Prasad Nilkod Shambhu
New age 'fintech' companies plan to change
the way individuals and corporates buy and
access financial services by offering
improved customer experience, lesser fees,
personalized financial management at their
fingertips. But banks have taken solace in
the fact that they enjoy the trust of masses,
have a near monopoly of all sophisticated and
high value financial services such as housing
loans, coupled with exclusive access to customer
data which enable cross-selling of a gamut
of financial products to keep the competition
at bay. Even today, employees get paid in a bank
account, and fintech providers, in spite of their
best efforts and rapid growth, are secondary
accounts in the lives of a typical consumer.
“Open Banking” is an emerging trend which
has quickly moved from being an idea to
reality threatens to disrupt this state of affairs.
Open Banking involves bank and other financial
institutions enabling third party developers /
applications to access their customer's data
through the use of Open APIs. It enables
customers to share their banking data such
as transaction history and account details
with any other software application, in a secure
manner in real-time.
When external parties have access to
consumer's historical data, they can build a
whole suite of applications around financial
institutions, such as providing a better customer
experience, aggregate account information
spread across multiple financial institutions
at a central place, combine customer's financial
history and other personal data to generate
more accurate credit profile, offer person-
alized saving advice, etc. It allows customers
to gain a 360 degree view of their finances
and manage their money and accounts wisely.
With open banking, customers do not just
consume the platform, but contribute to it.