Since the introduction of PSD2, open banking is fast becoming a global phenomenon. It is rapidly changing the financial services landscape with innovation and open-data approach. Fueled by the latest regulations and new market entrants, open banking is altering the way we interact with our banks, make online payments, and pay our monthly bills.
Open banking promises a revolution in how we consume financial services and products. It opens new and fresh opportunities for us to manage funds and choose banking services based on our needs. The advantages of open banking are substantial for customers. Let’s analyze some of the core benefits that consumers are going to gain with the implementation of open banking.
Making things easier for customers
Open banking puts customers from the back seat to the front seat when it comes to managing their data and funds. Customers will be able to get more and better financial options based on their current needs. They can also switch between service providers to seek better and more profitable deals.
Faster online payments
At present, when a customer uses a credit/debit card to make payments, they need to authorize the payment with the card company to verify the purchase. Open banking will allow the customer to pay directly to the vendor using online banking. It will ensure the payment is real-time and secure at the same time.
Post open banking, customers will get a clear and holistic view of their bank accounts, loans, and investments. It will help them to choose their service providers and opt for better financial products. Moreover, everything related to payments including fees, processing time and charges will be visible to customers for more informed decisions.
Open banking opens up access to your financial data to TPPs (AISPs and PISPs) to bring value proposition to consumers. These providers could reduce friction in online payments and enable customers to manage their cash efficiently.
New and better services
Open banking is not just limited to revolutionizing financial services but also paves the way to build new products and services. The products and services will cater to the ever-changing consumer demands and will ensure superior customer experience every time.
Elimination of surcharges
PSD2 prohibits surcharges which will thereby reduce the overall cost of payments. It will enable consumers to make a better choice in terms of payment options.
Improving customer experience
Open banking is soon to become an industry reality. It proves to be much more than increasing competition for banks. It offers a huge opportunity for banks and Fintech firms to streamline payment services and drive better customer experience. To make the most out of it, banks and Fintech businesses must not just focus on being compliant with regulations but develop and push solutions based on consumers’ behavior.
The key for them to sustain in this highly competitive environment is to identify the customer needs. Consumer experience will ensure longevity and strong market position for banks and businesses in the market.