The Technological Revolution of Financial Data

Much has been said about the evolution of technologies in the area of ​​finance and the changes in standards brought about by it, relevant not only to individuals but also to companies in their relation to money. In this affluence, Open Banking has great expression, and favors the provision of relevant information to the user, allowing better management of its equity.

After all, what is Open Banking?

The main concept of Open Banking refers to the large and traditional banks that open the data they hold, to integrate with other services of interest of the client, thus allowing the creation of new products. Assuming that the information belongs to the client, not to the bank, this data sharing is carried out with strict technical standards, through APIs (Application Programming Interface, in Portuguese) and is only available with the express permission of the client.

Another goal of Open Banking is to increase the choice, control, and protection of how consumers manage finances and help foster the continued development and innovation of digital financial transactions.

Benefits of Open Banking

1. Financial control: Extending visibility and control of finances to make efficient and meaningful decisions.

2. Security: Security and privacy are incorporated directly into the designed and implemented APIs. Open Banking also provides an opportunity for banks to reassess their business model.

3. Increased competition: By generating greater competition between established providers and new, innovative operators, existing products become more flexible, customized and convenient for customers.

4. Innovation: The technological architecture used in scale to generate insights from customer data enables the advancement of digital initiatives in relation to the traditional financial ecosystem and the way to manage money.

The technological revolution in financial data

This is the opportunity for financial services organizations that want to remain competitive in terms of innovation and user experience. However, many banks are still uncertain about how to approach the practicalities that need to be considered. Given that this is a new space for most banks, companies need to embrace more entrepreneurial spirit to explore the true value of the Open Banking revolution.

Open Banking requires new ways of thinking and new ways of working, teams will become hybrid, be more agile and have a mix of skills and people. In addition, organizations need to develop to be technically enabled for business.

Technology is, of course, a significant enabler in creating an Open Banking strategy, with the most advanced companies creating a new channel of development through their own ecosystems, since there is a cost reduction benefit in terms of creating more agile, leaner and more economical development environments or, for example, enabling the migration / implementation of cloud and mobile solutions.

Open Banking Regulations

The UK took a major step in early 2018: Open Banking was regulated, and the new set of rules dictates banks' non-exclusivity in holding customer data, which can now be shared securely with third-party providers. This is unusual and brings innovation opportunities in services and applications. According to the report by the Center for Economic and Business Research (CEBR), Open Banking plans can boost the UK economy by £ 1 billion, softening lending and creating 17,000 new jobs.

Financial risk premium

By improving the transparency of current account data with Open Banking, with the consent of the customer, external services will also have access to the data. Since banks will have a better picture of credit risk, this will favor the reduction of the risk premium currently levied on interest rates linked to banking products, such as loans, financing and mortgages, due to a more accurate perception of the risk of underlying credit of a natural or legal person.

Opportunity for the financial segment

Some banks are taking the opportunity to reinvent their brand, expand their business model and make new offers available, which can compete with other banks and new technology operators offering financial services.
The new standards will also increase competition and eliminate information barriers as new FinTechs access the data needed to deliver new and more specialized services.

Opportunity for the consumer (PF and PJ)

Open banking significantly affects the financial services industry and the way consumers interact with the existing banking system. The granting of third-party access to data is intended to broaden and develop products for the market and improve the customer experience in accessing financial products.

- And what does Open Banking mean to companies?
- Easier financial management.

The changes open up the ability of third-party companies to create user-driven applications and services. For example, if a company has accounts with multiple banks, you can get an app to see them all in one place. Comparison sites can make it easier to compare financial services in one place, and developers can create applications that have more features than existing ones with alerts, bots, or Artificial Intelligence for automated financial controls.

With Open Banking traversing the path of technological evolution, we will see more and more innovative tools that benefit companies in a variety of ways. These include tools that provide information to help companies better manage their money, improve comparisons of loans and loans offered, and use the convenience of Open Banking to remove costly and administrative tasks, allowing teams to focus more on growth of its business. Simply add these facilities to existing data, which possibilities begin to grow exponentially.

In short, the reality of Open Banking is that more than just a new service that seeks a new opportunity, is the creation of value of a business model that, being enabled by emerging technologies, allows companies to operate in a way more efficient, previously unimaginable.

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