Anyone who knows me knows well how addicted I am to reading blogs. A few days ago, I was reading a blog from Tink (will put the link at the end and you will know why), Tink, for those who might not know, is a Visa solution that aims to change the banking industry for the better. Tink has successfully built Europe’s most robust open banking platform offering tools for everyone from startups to big banks to innovate and build the future of financial services in Europe.
Well, I love their blogs, they like to write a lot about open banking, but this time the title of the blog was “The evolution of the revolution – from open banking to open data economies”, an interesting title and body, stating that while open banking is still far from global adoption, it has already moved beyond, mentioning that the term ‘open finance’ has emerged as the natural continuation of open banking.
So, before the term ‘open banking’ gets very old, let’s dive into it:
What is open banking?
Open banking -by definition- refers to the process of banks and other financial institutions opening up data for regulated providers to access, use and share.
Sharing my data? 🤯
Don’t worry, it’s not as it might sound, it’s not about selling our data by the bank to third parties. The intention behind open banking is totally the opposite, it’s for improving financial services for all of us by opening up access to data for new companies to innovate new products and bring new services to the market. This practice is possible through the use of APIs (Application programming interfaces).
Why Open Banking?
Open banking empowers interoperability and networking between banking information and service providers, creating a smoother and better user experience. Transparency, security and encouraging competition in the financial industry are considered top goals for open banking.
Consumers’ financial data will be finally released from the bank’s monopoly and will finally belong to the customers themselves.
With open banking, fintech companies can bring their modern and customer-centric solutions to the market even with the lack of resources to acquire customers. With the use of the APIs, fintech companies will access banking systems and customer databases allowing also end users to manage their accounts via third-party service interfaces.
It is clear how much impact open banking has on user experience, uniting banks and fintech companies and creating a space for innovation. The competition will get harder and harder but, in the end, the user experience and the understanding of customers' needs will be the drive for banks and fintech to earn customers' trust.
Are we far from having that?
Remember the blog from Tink, it is very happy to see that Egypt is already on track, and made it to what they call ‘the global open finance maturity index’.
You can check out that blog through this link: https://tink.com/blog/open-banking/report-open-data-economies/