The Benefits and Challenges of Open Banking API for Fintech.pdf

The Benefits and Challenges of Open Banking API for Fintech.pdf

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  The Benefits andChallenges of Open Banking API for Fintech The finest blend between the financial industry and technology has recently witnessed a giant leap. Commonly referred to as FinTech, the industry is growing rapidly, thanks to customer-focused FinTech products and services. Do you know that about 90% of Americans use FinTech services? Financial companies turn to technology to offer best-in-class services to their clients. The recent COVID-19 pandemic and global lockdowns have forced banking and financial companies to develop more customer-focused products and services. In addition to that, the behavioural patterns of people are changing. The FinTech industry is developing new initiatives like an open banking API to meet their expectations and demands.
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  Statista predicts that638 million people will use Open Banking in 2024. However, this new initiative is still in its childhood. As per Mckinsey, only 10% of open banking’s promise is realized as of now. However, this new trend is highly promising and will surely transform FinTech. What are Open Banking and Open Banking APIs? Open Banking is a financial concept that allows financial information exchange between two parties. For example, you have an account in a bank. Open banking enables the bank to safely share its financial information or data with non-traditional financial institutions. Here, the bank shares the information via APIs, also called open banking APIs. Non-banking financial institutions such as expense tracking companies, money lending companies, financial planning companies, and others use open banking prospects. Such safe financial data exchange allows FinTech companies to offer highly-personalized and client-centric financial services. Banks and other financial players collaborate to develop highly convenient and client-centric solutions. the main aim is to meet customers' expectations to ease banking and payment-related operations. This surge has led to the popularity of Open Banking APIs. Banks and other financial players use open banking APIs to grow their customer base. On the other hand, third-party financial institutions use APIs to offer highly personalized offerings and products. What is an API? Generally, an API, Application Programming Interface, allows communication between two devices. In FinTech terms, APIs allow developers to communicate with a service provider like a bank. However, it is more challenging than it seems. First, the service provider will publish a list of API specifications to which the bank must adhere.
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  people call itOpen API, as any third-party developer can access it under some specific conditions. Open APIs have specifications available to the public, but the stakeholders might limit the available data as per the agreement. When a company opens an API, other third-party stakeholders can consume the API to provide those services over the Internet. Benefits of Open Banking APIs An open banking API can offer great value to both consumers and bankers. 1. Data Insights Banks can get valuable customer data insights, such as buying history, past investment records, financial goals, and other crucial financial information. Banks can use this information to fine-tune their financial products or services to offer highly customized services to customers. 2. Improving Services Rapidly Open banking APIs also help banks and financial institutions improve service quality by considering customer feedback and reviews. 3. Rapid Product Development Open banking APIs can become instrumental to banks and other institutions to develop precious and customer-centric products rapidly. Some services are risk management, loan processing, voice or chat banking, etc. Read Full Article Here At:- Serve Tech-Savvy Customers