Banking is supposed to be a secured process. The details of customers, their financial data, and information about transactions should be handled with utmost care to prevent information breach. This kind of handling became tougher and difficult to manage when customers increased and almost every day-to-day activity got linked to banking systems. Just like robotics and machines found more importance in the industrial sector, machines came to aid banking processes. Being an interactive field, it is necessary that the machines and systems taking over the functions should support a smooth interactive application.
This work is effectively done by APIs or application programming interfaces which allow financial data to be created, stored, shared and used interactively and securely. This is called Open Banking or Open Data Bank. The data here is not centrally controlled by one body, but the customers themselves. The users can carry out any type of transaction through the application and also connect with other financial institutions for transferring funds and analyzing different products before deciding on the best one.
Advantages of Open banking
Open banking is a perfect example of how the new age Fintech has transformed everyday life of commoners in an innovative way. As more and more from the general population are shifting to smart banking, every financial firm, from the smallest to the biggest is competing with each other in delivering the most advanced and user-friendly open banking facilities.
Affordable banking products and services become available to all due to the cost-effectiveness created by competition.
The constant strive to improve the existing technologies so as to increase customer base and avoid customer switching has resulted in better technology and customer care assistance.
When you have multiple choices and the power to carry out transactions, it is obvious that, as a customer, you will take the risk to evaluate and opt for the best choice. This makes it almost compulsory for the financial firms to maintain accuracy, transparency and fair practice in their working, policies, and pricing for the satisfaction of customers.
Any extra charges or penalties cannot be levied on the customer without prior intimation as the customer can easily transfer the checking account or savings account or any other products of the current bank or the branch to a more customer-friendly firm.
Open banking also uses the power of artificial intelligence and predictive user analysis to decide from the customer’s side on which are the most suited banking applications. This is also beneficial for the financial firms who get accurate information on the customer preferences and how their innovations can be affected.