{"id":36472,"date":"2021-09-07T11:05:10","date_gmt":"2021-09-07T09:05:10","guid":{"rendered":"https:\/\/www.intellias.com\/?p=36472"},"modified":"2024-07-22T17:03:51","modified_gmt":"2024-07-22T15:03:51","slug":"open-finance-why-a-one-stop-shop-banking-experience-is-the-next-step","status":"publish","type":"blog","link":"https:\/\/intellias.com\/open-finance-banking-experience\/","title":{"rendered":"Open Finance: Why a One-Stop-Shop Banking Experience is the Next Step"},"content":{"rendered":"
With more customer data up for grabs, financial institutions (FIs) finally have the opportunity to turn into one-stop-shop banks.<\/p>\n
\u201cI once had a single bank account. Can you imagine that?\u201d This is a tale Millennial grandparents will one day tell their offspring. However, those children or grandchildren will just shrug and say: \u201cYeah, I also use just one bank account.\u201d<\/p>\n
The difference is that those future bank accounts will provide a connected one-stop-shop banking experience rather than the banking-in-app experience we\u2019re used to today.<\/p>\n
So what exactly will happen between now and then? Open banking will mature into open finance.<\/p>\n
The open banking movement and supporting legislation empowered consumers with the right to share their transactional data with any third party.<\/p>\n
This gave a sizable boost to the API economy. FIs and FinTechs gained the opportunity to securely exchange data with one another to provide consumers with a consolidated picture of their financials. By 2022, the new opportunities created by open banking standards in the UK are expected to generate over \u00a37.2 billion in revenue<\/a>.<\/p>\n Learn how API strategy fuels banking growth<\/p>\n The rapidly maturing API ecosystem, paired with the global surge in open banking regulations, has effectively launched the digital-first banking epoch. Plus, it has prompted incumbent banks to double down on digitization efforts.<\/p>\n Open banking has served as a springboard for new use cases such as:<\/p>\n As of 2021, over 2.5 million UK consumers<\/a> were engaging with open banking products. Among these, one million adopted such products between January 2020 and August 2020. API calls rose from a modest 66.8 million<\/a> in 2018 to nearly 5.8 billion in late 2020.<\/p>\n The open banking ecosystem is booming. Why push it further?<\/p>\n Because the finance industry is still far from seeing it all<\/em>.<\/p>\n Open banking participants in the EU and UK can only view customers\u2019 payment data, which tells just half of the story. In the US, regulations are laxer. Still, many financial companies aren\u2019t fully capitalizing on emerging data sharing opportunities. To some extent, this is due to legacy technology constraints<\/a>. In other cases, it\u2019s due to reluctance to innovate.<\/p>\n Few traditional financial institutions use alternative credit data<\/a> for lending decision-making, despite a favorable regulatory stance on it. Many also shy away from POS lending, crypto trading, and AI-driven wealth management<\/a> \u2014 niches that have gained significant traction among consumers thanks to FinTechs.<\/p>\n Open banking gave consumers the convenience to easily hop into new financial services, which they tend to do a lot. No single FinTech type dominates the landscape \u2014 and all have grown since the start of the crisis.\n
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