Why using open banking software is important nowadays
In an era where technology is gradually replacing traditional ways of working, banks taking the lead in applying technologies to system optimization will dominate the industry. One of them is the application of open banking software for your business.
Financial services companies are realizing the importance of Open Banking initiatives and the critical role of APIs. Traditional banks recognize that in order to compete in the industry, they must improve their digital capabilities in order to avoid being disintermediated by new entrants with superior offerings and services.
In this article, let’s go with SmartOSC Fintech to learn why using open banking software is important nowadays.
What is open banking?
Open banking is a practice made possible by a set of technologies, regulations, and services aimed at transforming the financial industry. To that end, IT experts create new banking services and ways to interact with them, as well as new banking models and commerce capabilities. Open banking allows third parties to access bank data via application programming interfaces (APIs).
Third-party providers (TPPs) represent a wide range of options, from microloans to simple payment gateways and e-wallets. TPPs can include both banks and businesses, depending on the service.
The benefits of open banking software
Enhance Service Offerings
The importance of APIs in Open Banking initiatives cannot be overstated. APIs are a channel for doing business in the new Open Banking ecosystem. By opening up their APIs, banks can easily connect to other APIs in the market, allowing them to expand their service offerings by introducing native FinTech solutions in a plug-and-play fashion.
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Experian Connect API, which allows customers to see their credit score in real-time through their existing bank account, or the National Change of Address (NCOA) API, which notifies banks if a customer changed their address or if an existing address is deliverable, are two examples of such APIs.
Banks can further enhance and transform current offerings by embracing the Open Banking API economy, increasing their appeal to both existing and prospective customers.
Improve Overall Customer Engagement
Open Banking APIs increase a bank’s appeal and allow it to meet the changing demands of existing customers while also appealing to prospective customers. These APIs can also be used to increase customer engagement and address customer needs in a secure, agile, and future-proof manner.
Such participation is critical, especially as upstarts and new entrants continue to disrupt the financial services industry and more services, offerings, and devices enter the market, resulting in an increasingly competitive environment for traditional banks and shifting customer expectations. This competitive environment presents challenges for traditional banks and forces them to innovate further in order to retain and attract customers.
Increase Digital Revenue
In addition to improving bank services and increasing customer engagement, Open Banking APIs can help banks increase digital revenue through new channels.
According to Kristin Moyer, Vice President of Research and Distinguished Analyst at Gartner, “Open Banking is about making everything for sale.” It offers a new way for banks willing to think differently about what it means to be a bank to increase digital revenue.”
Increasing digital revenue is critical for banks, especially in an era when Open Banking initiatives are becoming more prevalent.
Conclusion
Traditional banking must confront the new reality in which banks are not the only market participants. Those who attempt to adapt to new technologies will fare better in the long run.
It’s safe to say that open banking software is a foregone conclusion. The current ecosystem will be transformed into a set of digital tools. Banks must develop a new vision and determine their place in the new financial model.
The evolution of fintech will be spectacular to watch as long as the interests of customers are prioritized. Even though there is understandable skepticism about changes, customers will benefit the most from open banking. Contact SmartOSC Fintech right away to be consulted more about this issue.
