Open Banking- Want to Know About It?
A technology in finance which allows third-party developers called APIs to access customer information of banks is called open banking. It enables the creation and sharing of financial data by different financial institutions in a safe manner. Let us see the benefits of open banking.
- Cost: Large financial institutions will also be in a position to offer services at a low price to the customers. Thus, even the not so richer ones can avail services and products offered by premium bankers. The cost of banking will be reduced due to open banking.
- Speedy settlement of funds transfer: Open banking helps in a speedy settlement of transactions. Thus, delays can be avoided and transactions will happen in a fraction of second.
- Product comparison: Customers will get full and better knowledge of a whole lot of banking products offered by all the bankers. In the present scenario, people do not know about good financial products which are newly available in the market.
- Better customer service: Open banking will induce the players in the banking and financial industry to offer better products and services at a lower Due to this competition, the customers will get better products and services.
- Better technology: Open banking will improve innovative financial products to be widely available in the market.
- Switch over made easy: Switching over from one bank to another will be easy in open banking environment. The present difficulties and delays the customer is facing while closing account in one bank and opening a new account in another bank will be totally eliminated in open banking.
- Better availability of customer credit historical data: The bankers can get better data on the credit history of the customer than the present system. Traditionally the role of a banker is such that the data security becomes a primary responsibility of the bank. But if it is shared through improved means of safety, such sharing benefits both bank and customer. Banks can prevent frauds when they get access to better data on the credit history and rating of customers. They can be more cautious towards customers having a bad rating. Customers who have a good rating will have more benefits and ease of access. In open banking, data availability benefits the customers also because they get more product information and better service. Unlike traditional banking, here the responsibility is shared by everyone. Hence more fairness and ethical practices are ensured.