Unlocking the world of Open Banking
As of this year, there are now more than 5 million active users of Open Banking services in the UK. This is demonstrating a growing appetite for users and businesses as they use more Open Banking services to move, manage and make the most out of their finances.
With a recent survey finding most use cases for Open Banking created by fintechs and non-banks in the UK are centred around payments, the world’s leading financial institutions are increasingly using Open Banking platforms, from start-ups to the largest banks in the world. Companies are becoming aware of the power of Open Banking and are empowered to learn what they can do with it, creating the art of possible to offer more products to customers.
The power of Open Banking
As a result of accelerated growth, businesses have increasing demand to provide Open Banking integrations and it’s a case to stay ahead of the game with technology resources for both businesses and end users.
It’s noted that 40% of people have reduced their spending over the last 18 months, and the pandemic has since welcomed new companies who want a different and better way to handle their end user’s finances to the world of Open Banking.
On one hand, you’ve got a generation of tech-savvy new savers who are open to tech-driven solutions. But on the other end of the spectrum, you have a group that has suffered financial shock and now need to budget more carefully.
An increase in digital spending habits has meant a significant movement toward online activity has accelerated Open Banking trends. The big opportunity with Open Banking is actually enabling the customer to aggregate away from their spending to the asset management side of their financial lives.
From a business-to-customer perspective, customers can be shown how to spend their money across all areas such as aggregated and historical view with Open Banking integrations, with the app as a showcase of their technology.
Creating value across the economic spectrum
Since the pandemic, ways of assessing credit are not that simple, and customers were given COVID payment holidays which means files were no longer accurate leaving credit systems to struggle.
Financial institutions are moving mountains to build safer financial data sharing. Open data gives the ability to share financial data through a digitalised ecosystem in a way that requires less effort or manipulations from the user. Open data allows for more accurate risk assessment and stronger fraud protection.
Data is predicted to grow, and the impact of the credit market will see an adaption of how money is managed, resulting in people gravitating towards Open Banking. Whether it’s a case of cutting back on non-essential sending or seeing a decrease in savings and increasing debt, the demand for the features and services that open ended banking enables has grown as needs become more intense. Those on lower incomes are increasingly looking for budgeting and money-saving tools. At both ends of the spectrum, demand for the kinds of features and services that open baking enables has become greater.
The future of Open Banking
With 71% of SMEs expected to adopt Open Banking by then end of 2022 and estimated to create revenue of around £7.2bn, Open Banking is quickly developing and maturing into an easy route for banks and financial institutions to deliver innovative solutions. Banks have a huge opportunity to offer this kind of personalisation at scale and businesses will look expand its Open Banking enabled solutions.