A look at how the open banking revolution is creating new business opportunities and product possibilities
The open banking revolution has played a critical role in infusing fintech into business models for more expansive possibilities and functions. Every vertical from retail to mobility has felt the implications of the open banking revolution and many have leveraged fintech to open up new vistas of business opportunity. Owing to open banking, the foundation for upcoming billion-scale service models are being laid out, owing to the facilitation of the digital exchange of financial data. Ostensibly, open banking is also leading to new product possibilities and is removing many bottlenecks in the current system.
Source: EY – Global FinTech Adoption Index 2019
Enabling a simpler framework for financial data interchange has the potential to alter financial systems, resulting in product innovation and improved customer and end-user financial service facilitation. Based on insights from YOURSTORY and saltedge, let’s take a closer look at how open banking is changing the rules of the game.
Setting a new mandate
India’s open banking ecosystem is currently one of the most advanced in the world, thanks to the efforts of banking incumbents, the support of digital public infrastructure, and the engagement of a large number of entrepreneurs. Notably, the country has selected a hybrid approach in which both the market and the government actively participate in the development of the ecosystem. As India establishes itself as one of the world’s largest domestic banking markets, open banking will be critical in propelling the country’s economic trajectory through financial inclusion and innovation at a population level.
The future of India’s open banking ecosystem is both poignant and profound, with a thriving ecosystem that is coming up with solutions that allow for financial inclusion and creativity in new and exciting ways.
How it can work for your business?
Open banking paves the way for companies to access their financial data from any bank or nation, allowing them to use it in a variety of ways. Building apps around this data, collecting it, and converting it into financial behaviour insights is one example. Making quick payments straight from your bank account is another open banking benefit that may help you run your business more efficiently.
With open banking, businesses may save money in the following ways:
- Accounting is fully automated, covering bank and non-bank accounts, with no avalanche of spreadsheets;
- Providing automated access to financial information to auditors, tax authorities, and potential investors;
- Obtaining better rates on loans depending on the company’s whole financial history;
- Receiving or receiving payments at a fraction of the cost, with no rolling reserves;
- Real-time monitoring of your financial position might help you spot flaws, such as needless spending.
- Thanks to the brokers’ price comparison and spending pattern detection, switching to a more inexpensive service provider is now possible.
- Preventing bank cards frauds, since you don’t need to provide authorisation details (CVV, PIN, PAN);
- Automating salaries and taxes’ payment process through a single interface.
When done correctly, businesses today can leverage fintech for a more hassle-free, accessible, and secure customer experience when it comes to digital payments and payment options. A comprehensive approach leveraging fintech would help foster trust, clarity, and visibility over time. Businesses can benefit greatly from open banking, but implementing it correctly may require assistance from the outside. There are numerous technological, regulatory, and security issues that a single firm cannot address. It’s like going through an elaborate labyrinth and such a process of trial and error is best avoided.
– Lionel Alva