In the European banking environment, there is only talk about Open Banking, however, end consumers in most cases vaguely understand what they are talking about and why they need it. Information in the spirit of "open bank" and "access to your information" sounds, to put it mildly, intimidating. Therefore, while banks are finalizing their Open APIs, we are talking in simple language about what every consumer of banking services needs to know and give examples.
First, let's introduce ourselves: Advapay provides IT solutions and consulting for fintech companies and digital banks.
So, the most important thing that needs to be stipulated is that none of your information is transferred to anyone without your permission. You and only you decide which applications and services and to which specific information can be accessed. And can they at all.
For starters: what is Open Banking?This is when banks "open" access to customer data to third parties. This is done using the Open API solely at the request of customers, and the "third party" in this case are third-party services. In essence, "open banking" should create an environment for the ideal symbiosis of banks (which have a huge client base and do not have the latest technology) and fintech (which has technology, but does not have such a large client base). The goal of this whole story is to increase competition among financial service providers and stimulate innovation in the banking environment. Why do you personally need this? As a rule, the average consumer uses several bank accounts and does not delve into how much he overpays for the service, how much the service can cost from others, and what is generally useful he can get. Open Banking will be able to accelerate
How will it work? Fintech companies, other banks, retailers or messengers will be able to access customer data or conduct transactions. The more participants in this system, the higher the competition, which means the quality and variety of services will increase, and prices will decrease. All of this will ultimately bring real benefits to you as an end consumer.
Here are just a few of the benefits and examples where the end consumer will benefit from the adoption of Open Banking.
● Further, it will make it possible to pay for goods and services from different accounts of different banks without leaving the same application. You can create ready-made payment templates and use them to pay through any bank.
● The same application will be able to analyze all your expenses, income, payments and give useful tips for managing your personal finances. An important point to note here is that these analytics and management tips will extend to your utilities, telecoms, mortgages, and savings — the program will be able to guide you on how to best diversify your funds, taking into account all of your sources of income and expenses. It's like a wise wife, only better.
● In addition, there are applications that, using sophisticated algorithms, calculate how much the client can afford to save, and automatically deposits funds into your bank account after a specified period of time. Such programs will also allow you to earn bonuses for every friend you refer.
Perhaps the most advanced of them all, Starling Bank provides customers with access to their “marketplace” where they can choose from a range of products and services exactly those that can be integrated with their account. For now, the offer includes Habito mortgage broker, PensionBee retirement plans, Kasko travel insurance (AXA), Wealthify savings accounts and many other services. In our previous article, we already wrote about the future of multiservice applications.
Ultimately, Open Banking can grow into a global marketplace for any service that requires your financial information. This saves you the hassle of going into all the apps of all your banks and saves you a lot of time and effort. However, there are still many questions ahead: does the client want such "openness", how safe it is, and much more.
* * * * *
Financial institutions in Europe are still in the process of testing their Open API, in Russia Open Banking is not yet at the legislative level. The end users, for whose benefit this system is conceived, either do not know about it, or are wary and apprehensive. We hope that in the short term the situation will improve: the term “Open Banking” will not arouse mistrust, and consumers will be able to use more convenient and quality services.
First, let's introduce ourselves: Advapay provides IT solutions and consulting for fintech companies and digital banks.
So, the most important thing that needs to be stipulated is that none of your information is transferred to anyone without your permission. You and only you decide which applications and services and to which specific information can be accessed. And can they at all.
For starters: what is Open Banking?This is when banks "open" access to customer data to third parties. This is done using the Open API solely at the request of customers, and the "third party" in this case are third-party services. In essence, "open banking" should create an environment for the ideal symbiosis of banks (which have a huge client base and do not have the latest technology) and fintech (which has technology, but does not have such a large client base). The goal of this whole story is to increase competition among financial service providers and stimulate innovation in the banking environment. Why do you personally need this? As a rule, the average consumer uses several bank accounts and does not delve into how much he overpays for the service, how much the service can cost from others, and what is generally useful he can get. Open Banking will be able to accelerate
How will it work? Fintech companies, other banks, retailers or messengers will be able to access customer data or conduct transactions. The more participants in this system, the higher the competition, which means the quality and variety of services will increase, and prices will decrease. All of this will ultimately bring real benefits to you as an end consumer.
Here are just a few of the benefits and examples where the end consumer will benefit from the adoption of Open Banking.
All-in-one: one dashboard for all your financial instruments
● Let's say you have three accounts with three different banks. Today, in order to make a particular operation or view the balance, you need to go to three different Internet banks or open three different mobile applications. The Open Banking system will allow you to "collect" all this information in one application of a third-party provider - ie. in fact, you will be able to use all your accounts in one interface.● Further, it will make it possible to pay for goods and services from different accounts of different banks without leaving the same application. You can create ready-made payment templates and use them to pay through any bank.
● The same application will be able to analyze all your expenses, income, payments and give useful tips for managing your personal finances. An important point to note here is that these analytics and management tips will extend to your utilities, telecoms, mortgages, and savings — the program will be able to guide you on how to best diversify your funds, taking into account all of your sources of income and expenses. It's like a wise wife, only better.
● In addition, there are applications that, using sophisticated algorithms, calculate how much the client can afford to save, and automatically deposits funds into your bank account after a specified period of time. Such programs will also allow you to earn bonuses for every friend you refer.
Better services of other services
For example, you need to provide information about your expenses to a company that assesses the client's risks for further obtaining a loan or leasing. Open Banking will allow you to transfer this data in one click, and not stand in a queue "in the window" to ask for help. This will significantly speed up all the processes (in this example, the processes associated with obtaining a loan).Additional banking services
Suppose you entered the application of your favorite bank, and there is a new investment fund button. You just need to click and select the amount and term - and now, your money is already “earning”. The app can tell you how much money you can invest this month. Santander, HSBS, Monzo, and a few other banks, for example, offer to view their account, as well as online savings, mortgages, and cards held by any other bank on this list. The app is capable of grouping total customer expenses into 30 categories, including grocery purchases and utilities.Perhaps the most advanced of them all, Starling Bank provides customers with access to their “marketplace” where they can choose from a range of products and services exactly those that can be integrated with their account. For now, the offer includes Habito mortgage broker, PensionBee retirement plans, Kasko travel insurance (AXA), Wealthify savings accounts and many other services. In our previous article, we already wrote about the future of multiservice applications.
Ultimately, Open Banking can grow into a global marketplace for any service that requires your financial information. This saves you the hassle of going into all the apps of all your banks and saves you a lot of time and effort. However, there are still many questions ahead: does the client want such "openness", how safe it is, and much more.
* * * * *
Financial institutions in Europe are still in the process of testing their Open API, in Russia Open Banking is not yet at the legislative level. The end users, for whose benefit this system is conceived, either do not know about it, or are wary and apprehensive. We hope that in the short term the situation will improve: the term “Open Banking” will not arouse mistrust, and consumers will be able to use more convenient and quality services.
