Open Banking is one of the fastest growing sectors of the banking industry, bringing with it a tsunami of Fintech products, platforms and solutions that offer greater transparency, unsurpassed convenience, and highly personalised products and solutions for consumers. In this blog post, our CEO, Jan Ludik, looks at what the future holds for Open Banking.
“Open Banking refers to the concept of allowing third-party providers to access financial data and services from banks,” explains Ludik. “The goal of Open Banking is to increase competition and innovation in the financial services sector and provide consumers with more choice and quicker, more affordable services.”
Open Banking’s Origins
Open Banking was first introduced in the UK in 2016, with the implementation of the second Payment Services Directive (PSD2). This directive requires banks to provide third-party providers with access to customer account data and payment initiation services, with the customer’s consent. Since then, Open Banking has been adopted in several other countries and is becoming increasingly popular as a way to promote innovation and competition in the financial services sector.
Open Banking Benefits
One of the key benefits of Open Banking is that it allows third-party providers to offer new and innovative financial products and services to consumers. For example, a fintech company might use Open Banking data to create a personalised budgeting tool that integrates with a customer’s bank account. Another company might use Open Banking to offer a new type of loan that is more affordable and accessible than traditional loans.
“Another benefit of Open Banking is that it can improve financial literacy and help consumers better manage their finances,” says Ludik. For example, a financial advice service could use Open Banking data to provide tailored advice to customers on how to reduce debt or save for a specific goal.
Open Banking Growth
In the future, Open Banking is expected to continue to grow and evolve, as new technologies emerge and new regulatory frameworks are put in place. Some experts predict that Open Banking will eventually become the norm for financial services, as consumers come to expect greater transparency and control over their financial data.
Open Banking Innovation
One possible scenario for the future of Open Banking is the development of new and innovative financial products that are designed specifically for the needs of different segments of the population. For example, a new type of savings account might be developed for young people that offers automatic savings and investment options based on their spending habits. Another product might be designed for older people to help them manage their finances in retirement.
Another possibility for the future of Open Banking is the development of new platforms that bring together a range of different financial services, including loans, savings, insurance, and investment products. These platforms could be integrated with other services, such as shopping, travel, and entertainment, to provide consumers with a one-stop-shop for all of their financial needs.
Open Banking represents a major innovation in the financial services sector, with the potential to improve competition, innovation, and consumer choice. As Open Banking continues to grow and evolve, it is likely to have a significant impact on the future of financial services and the way that consumers manage their finances.
Discover how Traderoot’s suite of Fintech modules, products and solutions can enable Open Banking and other solutions in your business. Connect with us today by emailing sales@traderooteurope.com and let’s start perfecting commerce.