Consumer's Guide to Open Banking

Our Blog

Consumer's Guide to Open Banking

What consumers and end users need to know about the next big thing in banking.
  • By expertlawyer
  • 1 Mar 2019
  • 0

Financial institutions have been relying upon information technology like never before, and have been changing the ways in which they act and operate significantly to provide a quality experience to their consumers by minimising their hassles and visits. Open Banking software and systems are deemed to be the next big thing in the banking industry, which seems to be an upcoming disruption of the superlative degree, as increased regulatory as well as innovational progress has been achieved by various countries in this domain and legislations have been enacted worldwide in the recent past for efficient regulation of open bank data and open banking systems. Numerous governments have consistently taken various initiatives to foster innovation by commissioning the development of open banking software themselves, to encourage their use and increase awareness among the public.

The central idea behind open banking is to give a host of services to consumers, both banking and non-banking, which traditional banking and proprietary banking apps were unable to provide them, since the technological systems and departments of the banks were either inefficient or not open to third-party developers. Now that the banks are building several application programming interfaces (APIs) to enable these developers to build programs around the backend systems of the bank, many new startups have emerged on the surface and consequently, significant technological advancements are taking place in the banking sphere.

Since this article intends to focus on providing information for the consumers and end users of these new technologies, the details and concerns about adoption potential, data protection, and related cybersecurity are very essential for them to know and cannot be left undiscussed. Various surveys of assorted markets around the world have estimated the consumer trust and adaptability for most of these technologies to be low, and subjective opinions have depicted a mixed reaction. Security and Privacy concerns regarding not only these but almost all kinds of technologies have always been there for consumers and the discussions about them have also gained significant traction in the past. Even though governments, international forums, and corporations have done significant work to eradicate the risks through legislation and legal and technological framework, users have always been hesitant in using new technologies, especially the ones which seek details about them, due to the mentioned risks.

In spite of all the risks and concerns that are there and have been pointed out, the recent developments in the domain worldwide, as discussed earlier, will go a long way in curtailing the associated concerns and will be highly beneficial for the ecosystem. As the stage of both regulation and innovation is nascent, even though some of the nations are an exception to that, the trust of the users in the service providers and their services will thus increase as we move ahead in time. The demographics and future projections of various markets indicate the same and the trends seem to be exceedingly positive. Not only this shows that a lot is being done to alleviate the concerns of the users, but it also illustrates the fact that the willingness of users to try and adopt new technologies has also increased, as they find the services are very convenient and useful because they enable them to be smart with their money as well as their habits.

As we come to an end, it can be firmly concluded that open banking technologies are definitely going to very beneficial for every one of us and that they must be used and regulated appropriately. We thus realise that building an innovative, interactive, and secure ecosystem around these technologies is the sole responsibility of the users, providers, regulatory boards and government institutions alike, so that we can reap their benefits consistently and sustainably, without any nuisances.