Not that long ago open banking as a concept and a beneficial innovation was underrated. Not only legacy banks but consumers likewise were unaware of the perks and were hesitant to use the newly offered services. Consumers did not comprehend the fact that their bank may disclose their financial data to third parties and make consumer life easier. However, since the Second Payment Services Directive (PSD2) it started to turn around. Legacy banks now were forced to open up the data and, therefore, new services were able to emerge. For instance, open banking aggregators surfaced and proposed life-changing services to their customers.
Even though the idea of open banking and PSD2 implementation sounds charming to most consumers the change in legacy banks came slowly. According to MasterCard research “72% of consumers positively assess the opportunities offered to them by services based on Open Banking”. This research revealed that even more than 70% of consumers who possess accounts in two or more banks would prefer to make transactions and payments in one app and see all their financial data on one screen.
Furthermore, open banking implements opportunities to the customer value ladder that the financial institutions provide to their customers. It adds worth by allowing banking businesses of all sizes to integrate unprecedented solutions to their core platforms. Open banking aggregators, like Nordigen, can aid financial institutions by leveraging current practices with Fintech associates and giving access to a suite of APIs. In turn, financial organisations can make informed decisions and reach their full potential.
Open banking aggregators provide a single Application Program Interface (API) encompassing numerous separate bank APIs. They put forward a single integration and provide a systemised API despite the underlying financial institutions it aggregates.
For instance, for a modern person to stay on top of their finances can become challenging due to never-ending responsibilities and emergencies to attend to. Before open banking, the same person would log into separate online banking accounts twice a week to check the flow of transactions and forecast the financial situation for the rest of the month. If it is only one account then this task is easily handled and does not require major time sacrifices. However, in the case of more accounts, it would become a chore that wastes precious time.
Here open banking aggregators step in. They deploy open banking by allowing consumers to access all their financial data in one place - some even offer additional features such as a spending tracker.
Furthermore, open banking aggregators can conduct marketing research with the granted data access and tailor their future features and services based on individual needs. As for developers, such apps can be straightforward to build and implement.
Open banking aggregators and data aggregation, in general, carries benefits not only to consumers but also to businesses. If a business develops its app it can lead to stronger client retention or improved data for marketing segmentation and advertising purposes. Moreover, by using data aggregation an organisation creates inexpensive and convenient payment methods and can implement them without internal development teams. Even more, a business doesn't have to check compliance against the regulations and receives timely updates without extra costs.
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