Open banking has set new rules not only for traditional banks but also opened a new page and allowed fin-tech organizations to be a strong alternative to conservative banking institutions. Open banking allows fin-tech and traditional financial institutions not to compete with each other. Let’s look around and take a look at open banking examples and use cases.
Each of us has several accounts in different financial institutions. Ones are used actively, others just when it is needed. Each of the platforms requires unique login info, password, and other information to confirm the identity. It is hard to remember all this info. Open banking together with digital identity services is here to help. By using basic authorization steps, it is possible to log in to each of your accounts in seconds.
The revised payment services directive (PSD2) changed customer onboarding and made it much easier, faster, and safer at the same time. Another good thing that helps to save time – instant income verification. No need to wait a day or two any more – a few clicks and your payment is received. To settle an invoice is that easy too. By using systematized information, even automatic invoice settlement is possible.
An obvious improvement in the lending industry. Risk is a thing that needs to be evaluated before any financial institution can issue a loan. Before open banking changes, all the information was private, and each institution had a private database. So each institution was forced to investigate the consumer’s financial possibilities and prepare an offer according to the investigated or given information. Open banking makes it much easier not just because it takes less time but also because consumers can easily compare offers from different service providers and find what suits them best.
The clear financial history of all the time. Fin-tech start-ups are changing the process of overhauling mortgage applications. Usually, this process takes a lot of time and involves many organizations. The young modern business had some impacts on how to shorten this process and successfully apply it in reality. Let‘s hope that in the near future this process will become even more modern and less effort-requiring.
All these small changes and a common framework for all the approved organizations draw a line between what is legal and what is forbidden. It is extremely useful when procedures are not repeated unnecessarily, and each organization can focus on what it is doing the best. This is beneficial for the users that financial organizations are forced to improve and offer the best conditions to their customers and look for ways to attract new customers.
Article prepared by Nordigen.com
