Why is the future Open Banking?

May 26, 2022

Learn about the financial possibilities offered by open banking.

With the constant innovation of financial institutions comes Open Banking or open banking, which proposes the release of banking information that allows personalizing financial services and tailoring them to each user.

Open Banking is an online system in which customers of financial institutions such as banks, fintech companies, brokerage houses, popular financial, savings and loan companies authorize the sharing of their information with other entities for the benefit of customers.

Banks must allow access to third parties to their systems as long as they give their consent. In exchange for this information, these third parties will provide their services. To do this, they must become duly regulated entities and will have to be supervised to provide security and transparency to all parties involved.

In practice, this can translate to, for example, buying a car, and the company will be able to offer you financing in real time with the best conditions, since it will have access to your bank information. In this way, the processes to apply for loans to acquire goods are streamlined. In particular, this favors credit and loan institutions as they can offer average products. Thanks to open banking, the services that other companies can provide are multiple and can range from the development of applications to centralize financial information (even if it is in different banks or entities), to concentrating various forms of payment.

What are the advantages of Open Banking for customers?

  • Personalized products and services: thanks to the opening of data and the provision of information, entities have a better understanding of customers and offer products or services that are better adapted to customer needs.
  • Greater range of products: opening the possibilities to more suppliers allows an increase in the offer of products and services, widening the range of choices.
  • Cost reduction: thanks to the use of technology and the elimination of intermediaries, the cost of products and services offered can be reduced.
  • Greater security: there are security standards such as the use of reinforced authentication when carrying out transactions, which translates into an improvement in the security of operations.
  • Unification of all your information allows you to have all the information of your accounts, cards and banking products in a single application, even if they are from different entities.

What are the challenges and opportunities of open banking?

The adaptation of the financial system to the new environment of Open Banking, where customer information is shared by third parties and intermediaries of certain bank services are eliminated, is not without doubt, since the fact that external entities and providers treat with sensitive financial and personal data, it brings with it the risk that someone could misuse the information.

Syncfy is the first API in the world that designs solutions for the Open Finance world, including Open Banking, Open Crypto and Open Fiscal. Each of these solutions is tailored to the needs of customers while maintaining high quality and safety standards. Contact us and learn about the benefits that Syncfy offers to your business.

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