Changes need to be embraced by societies, and that’s why technology keeps bringing forward innovations. One of them is open banking which is also called, open bank data.
The question is – what’s open banking? Since new terms keep unfolding, it is essential to know what benefits you reap.
In this quick post, we shall share with you the concept of open banking and how open banking apps can help people.
What’s open banking, anyway?
Open banking is a practice where third-party financial service providers unlock access to transactions and consumer banking through the usage of APIs. It is a major innovation and is currently reshaping the financial banking industry.
Under the open banking concept, banks will allow control and access of customers’ financial and personal data to third-party service providers. These third-party service providers could include online financial vendors and technology startups.
But the customers have to provide consent to let the banks give such kind of access to third-party service providers. There will be open banking apps through which customers can check a box and read the terms of services.
Once this is done, the third-party provider’s SPIes can utilize the customer’s data.
Open Banking is Quite Promising
Open banking relies on networks and not centralization. This way, open banks can help customers share their data securely with different financial institutions.
The APP can look at the transaction data of customers and figure out what financial services and products are best for them. Perhaps you could endorse the idea of making a new savings account that helps with a higher interest rate.
Open banking is helpful because it gives a sneak peek to the lenders about the financial situation of a consumer. They can figure out what the risk level is and whether giving a loan is a good decision.
The Wonders of Open Banking & the Application
Technology is working on the concept of inclusion. These days you can get open banking apps that help visually impaired people understand their current financial situation through voice commands.
Open banking is also helpful for small businesses because these apps detect fraudulent companies.
Let’s face it: open banking apps is a helpful app. It uses open banking APIs so payments will be instant, and you will also gain access to a complete dashboard of your current finances. You can see your different accounts in different banks, credit status verification, and even get advice on how to save money. Since open banking relies on the Internet, one of the best examples we could give is API PayPal. Many companies are using PayPal to pay their employees (remote and on-site employees both).
Here’s what open banking API does for customers:
- Authentication and Identity.
- Data Analytics
- Business accounting
- Credit score
- Financial planning
- Subscription management
And the list goes on.
Open banking has changed the way we see the financial world.
To put it in simple words, open banking enables non-banks to offer all the banking functionality. A customer can authorize the legit apps to access the information. These applications are being run by third-party providers who cannot access the customer’s information without their consent. And to get this information, the applications now use a technology called open banking APIs. It is as simple as that!