As of now, in the present day, open banking seems like the evolution of traditional banking and the financial sector standard for the future. And since it is innovative and unique, open banking does offer amazing opportunities not only for entrepreneurs but to customers and entire regions too. When described and categorized, opportunities need to be differentiated in terms of who they can benefit from, if realized. Here, you’ll find relevant and up-to-date information about open banking opportunities in the world of today and the dangers that could hinder innovation.
Opportunities and benefits for the market are vast and can be very different. The opportunities are plentiful and apparent in not just day-to-day financial operations but also data verification, applying for financial services, getting better financial services, and offer much easier access to life-changing opportunities like mortgage or business loans, etc.
Most open banking market opportunity comes from the large amounts of data that the big financial companies possess. That data is usually just stored and isn’t used for innovation’s sake, as traditional banks are very conservative and have a strong foothold on the world’s financial market, hence, innovation and services, individually tailored to the needs of the client aren’t at the top of their priority lists.
However, government regulators and entrepreneurs have noticed a niche with opportunities. By doing business with banks and, per initiation of the client, sharing and analyzing their financial information, third parties can transfer information and analyze it. Instead of a closed system, you have an open one with free data flow, hence the term – open banking.
Both regulators and third parties have seen the benefits for the customers, encouraging and promoting open banking opportunities online and via traditional media outlets. Thanks to this huge push and intense communications between various third parties, government regulators, and big banks, more and more executives in these financial giants are moving in favor of at least trying out open banking to see how it works. Others, meanwhile are dedicating their attention and preparing for a transition to an open banking economy.
Even more opportunities are available outside of financial transactions, even though it would be what you expect from something that has to do with banking. Nonetheless, the primary and most notable benefits of open banking opportunities focus on verification, processing, individualization of services, and removing traditional obstacles along the way.
Open banking will allow businesses to analyze more data and do it more precisely. As a result, they will be able to offer more favorable terms for loans, offer different financial products (if in the past, banks would refuse to), verify your income for tenancy, purchases, etc. There definitely are many open banking market opportunities for entrepreneurs but also for clients who are keen to get better services.
Associated with these opportunities are, of course, risks and dangers. Open banking challenges and opportunities are interlinked. Challenges have to be overcome, in order to realize opportunities.
These dangers and challenges tend to differ from market to market. For countries that don’t have a regulated market of open banking – the danger is to fall behind neighbors and have an expensive catch-up plan in order to meet the needs of future consumers. If banks and regulators will not follow the trends, their customers will just move away to services that offer more benefits and work with an active model.
For countries and regions with regulations in place, it’s the threat of hindering innovation because of those regulatory requirements that seem to be the biggest obstacle. Finding ways to improve services and products within the confines of rules and legislature like PSD2 is the biggest danger of falling behind more innovative approaches from outside-the-box thinkers.
On the other hand, if the open banking opportunities aren’t regulated, there is the risk of not having a transparent sector and having services that are aimed at profits-at-all-costs, neglecting some of the major concerns in terms of security, ethics, etc.
However, as of right now, the global leaders in open banking seem to be taking an approach that’s worth following. They are achieving success and making ways for an open banking-led market despite the threats and dangers.
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