While Open Banking took a while to take a firm hold in the financial ecosystem, it seems that it will be the driver of change for the foreseeable future.

Open banking is a banking practice that provides third-party financial service providers open access to consumer banking, transaction, and other financial data from banks and non-bank financial institutions through the use of application programming interfaces (APIs).

Such open sharing of data and resources has been advocated since the early days of the IT revolution. Initially, technology seemed to be a stumbling block. But with the emergence of robust API frameworks and secure communication infrastructure, it didn’t take long for BFS entities to see how they can leverage the massive amount of data at their disposal to create new, recurring revenue streams.

The Rise of Fintech Powered by Open Banking

In a bid to increase their revenues and reduce their costs, banks are engaging with Fintechs with renewed vigor. As part of the broader banking ecosystem, fintech is also helping banks innovate at a rapid pace and enhance their customer service.

A global survey pegged the number of consumers who use fintech for money transfer and payment services at 50%, while 65% anticipated doing so in the future.

But where fintech really shines through is its ability to leverage banks’ data to deliver hyper-customized omnichannel experiences.

Given the above benefits, it is evident that a culture of open banking is crucial for a bank’s survival into the modern era while also fueling a new breed of financial services along the way.

However, this rapid pivot to open banking is still slow in some parts of the world due to regulatory and compliance restrictions.

But if existing open banking practices in countries like India are any indication, then the future of Open Banking is looking very bright indeed.

Here’s how open banking is benefitting banks, fintech & end-users:

• Open banking is helping key players overtake their competition by entering into strategic data-sharing agreements with fintech and other third parties.
• Open Banking APIs are enhancing the banks’ appeal as an entity worth partnering with. By merging these APIs with open source programs, banks & fintech are able to provide holistic services to their customers.
• Open Banking APIs are also unlocking the full benefits of service personalization in banking to the end-users. Today’s consumer has access to a wide variety of financial products, each tailored to meet their timely requirements.
• Fintechs can deliver personal finance management solutions, account comparison, and access to credit services through a single application.

There are numerous other benefits that far too technical to be covered in this article.

The point is that with a plethora of benefits and use cases, a multitude of opportunities also arise for service providers to capitalize on the impending boom.

Capture the Open Banking Wave and Unlocking New Sales

As with the rise of any new paradigm, there is expected to be a corresponding rise in opportunities in parallel technologies and services that feed into the ecosystem.

In the case of open banking, these opportunities are arising in Cloud, AI, Machine Learning, Data Analytics, and even IoT.

Scalable Cloud solutions: As banks begin to open their data & resources to more and more fintech and third-party providers, the need for a robust, resilient, and scalable infrastructure becomes evident. This has led to a significant investment in building better cloud infrastructures.

Today’s API-driven banking economy is built upon AWS & Azure primarily though GCP is catching up quickly.

Service providers with a proven track record in designing customized cloud architectures, optimizing cloud costs, and deploying cloud applications seamlessly will be in high demand in the Open Banking Era.

AI-powered fintech solutions: Banks have been sitting on top of mountains of customer data for so long and have done very little with it. Thanks to the emergence of a new breed of fintech companies hell-bent on maximizing revenue from customer data, banks and customers are looking at cutting-edge solutions that offer long-term value to all parties concerned.

The main focus for service providers here is to provide AI-based solutions for sale & marketing automation, customer retention, predictive analytics, NLP text procession, CV-powered text recognition, and more.

IoT-powered edge use cases: As strange as it sounds, consumers are now able to make payments through their wearable devices. Not just wearables, IoT technology, is being used by banks to have better control over a customer’s mortgaged assets. Since digital identity is becoming the norm, the transfer of ownership could be done digitally when a need for financing arises.

In the backend, all these applications are being driven by Open Banking practices.

As the use cases mature, more and more IoT vendors will come forward with requirements to incorporate some aspect of fintech with their products, and fintech will also be on the lookout for concomitant IoT products for their solutions.

Service providers with cross-expertise in IoT & fintech are looking at gaining early access to a potentially booming market in the coming decade.

However, it can be quite a resource-intensive task to identify emerging use cases across industries that leverage open banking practices.

AI-powered sales intelligence platforms like Draup offer sales teams with a holistic view of emerging opportunities in the area of open banking.

Sales teams can visualize the market maturity across Cloud, AI, IoT, and more technologies, view what solutions companies need, and tailor their packages to cater to emerging pain points.