Open Banking is a new regulation in the European Union that allows banks to use API based infrastructure to share data among other partnering banks as well as third-party service providers in order to facilitate their customers and launch services that bring the banking and finance world into the 21st century. To this date, nearly 130 applications have been launched to help different banking consumers belonging to different banks in the European Union and especially in the UK.
This launch of a new tech trend will surely help conventional banks with legacy financial services to turn the tide against the onslaught of Fintech and Challenger Banks especially in the UK where nearly 30% of transactions have been processed by challenger banks last year.
Here are a few positive trends that are expected to go mainstream because of this regulatory approval of using modern day technology to provide better services to banking and finance customers.
Innovative Solutions
As discussed above, the open banking regulations mean that banks will be able to launch services and solutions that will be able to make online banking not only seamless for customers but it will help launch mobile applications and services that can able the end-users to avail services from different banks.
Monitoring tools are the biggest benefit for end-users as these open API based infrastructures and processing models will allow them to perform transactions from a single platform from more than 1 banks, thus allowing for ease of use and greater transparency and data-driven financial decisions. Funds transfer is not the only upside of these innovative solutions but banks stand to benefit from these solutions as well in the form of:
Regulatory Compliance
Most of the times banking organizations and financial institutions find it nearly impossible to perform certain tasks or launch some form of new services because either it requires high manual cost or it involves regulatory approval that is the hardship of its own.
But with open banking partnering up with third party service providers has become easier and sharing of consumer data has found a legitimate ground. Now there are AML solutions for Banks that can easily automate the financial risk assessment process on behalf of banks and any consumer that poses a significant financial risk can easily be identified and denied service by banks.
This eliminates the need for manual compliance officers and paves the way for the integration of automated systems for financial risk mitigation. It means that not only the consumers will be rid of any financial risk but the cost of doing this action will also be substantially reduced.
Better Service Delivery
Banks and financial institutions are “famous” because of their below par customer service but now with the ability to integrate with third party service providers, banks can also make sure that the services offered to bank customers are also swift and free of any substantial risk.
Queries can be answered by virtual assistants built on machine learning algorithms, consumers can be verified with the help of identity verification at the time of registration and biometric verification solutions can be used to authenticate each transaction beyond a certain limit. With customer satisfaction being reported as low as 35%, banks can surely turn the tide of below par customer satisfaction standards by integrating online services that are designed specifically to enable banks to provide better services.
Conclusion
Open banking solutions hold a lot of promise for banks and with their large revenue coffers, it is easier for these banking giants to avail services of slick and easy to integrate technological solutions. Identity verification, AML screening, client due diligence or remote account opening, all these features can be easily integrated into banking operations and services with the help of third-party service providers that can handle the task of large scale customer acquisition as well as provide frictionless user experience at the same time.
