What is Open Banking?
In simple terms, Open Banking enables customers to share their financial data with third party service providers, typically fintechs and other online service providers, in a safe, secure, and controlled manner.
As of today, customers tend to maintain most of their financial products with one bank. Given all their financial data is within one single financial institution, they face less friction in processes such as customer verification for new product onboarding or money transfers. However, this restricts the customers from shopping around for the best products available on the market.
Imagine if customers have control over their financial data and can seamlessly share it on demand with the intended recipient, they can have a portfolio of well-suited products with multiple financial institutions. This in turn would result in customers getting better services and competitive rates. Customers can decide what data should be shared with whom and for what duration? This is what Open Banking aims for. It focuses on the customer and builds an experience that prioritizes their interests.
Open Banking promotes competition by democratizing financial data for accredited parties resulting in the flux of innovative newcomers with their products across the entire financial value chain.