What is Open Banking?
Open Banking Across the World
How Open Banking Impacts The Customer Experience
Accessibility and Affordability Brings Financial Inclusion
How Banks Can Prepare for Open Banking Success
Unfolding The Future of Open Banking
There are many advantages to embracing Open Banking and open APIs, the top five being:
Banks, FinTech and other third-parties can respond to market opportunities quicker and speed up their time to market.
New innovative products and services will be introduced and developed through collaborative partnerships across the financial industry.
The ability to significantly improve compliance and regulatory reporting.
New products and collaborations will extend current capabilities and reach an extended customer base.
The financial industry is already a vibrant marketplace, but Open Banking will accelerate the ecosystem growth even further.
Even with payment rails like ACH and wire, businesses today are still relying on financial models that are based on paper checks. Retail banking customers, however, get to reap the benefits of sending and receiving money instantaneously through platforms like Venmo, e-transfer, and Zelle. In episode 13 on the If I Ran the Bank podcast, Lou Towchik, treasury management consultant and former SVP at Huntington Bank, discussed how securing these same real-time transactions for businesses are accelerated in a faster payments world—it’s just a matter of applying the proper tools. With an introduction to the ISO 20022 payment structure, he says that allowing AP systems to easily talk to other AR systems will ultimately be what pushes businesses to move away from paper checks.
A virtual card is a credit card that’s just that: virtual. There is no physical aspect, just a uniquely generated card number designed to mask your personal account information across every transaction. It flips the traditional credit card on its head, allowing the user—not the card-issuing company—to control how much can be spent, where, and when they should be disposed of. While regular credit cards may expose your banking details in the event of a data breach, or frequently fall victim to fraud, virtual cards have extra security to ensure your actual account is not compromised.
Bank (Data) Feeds
Bank feeds will similarly be a game-changer in the (near) future. Today, the biggest challenge in achieving embedded capabilities lies in the data connectivity that can be established between banks and the third-party vendors themselves. But through bank feeds, or data feeds, the link between a business’ transactions and their ERP or accounting software is automatic—meaning, valuable banking information is securely exported and then directly imported into the client’s reconciliation modules.
In order for real-time payments, virtual cards, and bank feeds to truly transform the banking world, FIs and card networks will need to be able to exchange information with their customers’ systems of records in real-time. How? Well, through Open Banking-enabled APIs and ERP connectivity.
From what we know and what we’ve seen, open and embedded banking is indeed the future of financial services. Between enhancing customer banking experiences and enabling real-time connectivity between partners, the potential for open data in banking is massive. However, while we have only seen the tip of the iceberg when it comes to the power of Open Banking, rest assured, adopting the modern tools and technology needed for banks, businesses, and vendors to prevail has never been easier.
To learn how your institution can get ahead on the wave of Open Banking and revolutionize the banking experience for your commercial clients, book a demo here.