Open Banking is the future of banks

The future of banks is in the concept of Open Banking, which consists in banks sharing information with third parties, through APIs

Open Banking is the future of banks

Sharing information on open banking  allows apps for mobile devices or messaging systems, like Facebook Messenger, WhatsApp and Telegram to communicate with the bank’s app and every type of operations can be carried out.

The pandemic has disrupted everything in our contemporary societies.  With people confined to their homes, all businesses have advanced in their digitalization processes. The bank weren’t holding back, in their eagerness to completely insert themselves into the digital economy.

Great Britain was one of the countries moving most quickly towards regulating Open Banking; meanwhile, Brazil was one of the first countries in Latin America to be organized for implementing Open Banking, in a period of one and a half years. Nothing has been regulated on this subject in other countries; however, in some manner, the market itself has pushed banks toward Open Banking.

Advantages and barriers for Open Banking

Open Banking offers many possibilities, both for banks as well as people. With this concept, banks can advise their clients better and more quickly; it can also facilitate financing, loans, and transfers. Plus, the more customers you have on Open Banking, the diversification of the API will increase and you will have services available.

For example, individuals with just open a messenger app, like Messenger or WhatsApp, will be able to see their bank account balance. In addition, they will be able to see notifications on payments received, send money and pay all types of electric, water or cable bills.

At present, Open Banking is generating a lot of doubts among customers , because they’re afraid that their bank data are accessible by a larger number of apps. People don’t trust it and, therefore, resist change. Experts feel that a little more time will be necessary to resolve the subject and to consolidate the concept. When people know more about the subject and see how it works, they’ll end up adopting it.

How to implement Open Banking

Banks have also shown fear of information falling into the hands of hackers, in possible cyberattacks. So, cybersecurity will be key for Open Banking’s advancement.

The first step is for the government to form a standard of communication between those banks that will participate, so as to streamline the adoption process. Banks not only have to participate, but also commit themselves to the innovation. For example, you can see this in Singapore, where two local banks can already count on 300 API each.

Then, creating an ecosystem is essential, where the protection and the security of the customers is the most important thing, both in the authentication process and the transactions.

The other step is, for the process to bear fruit, the innovation in banks is not just key, but that there are also risk capital funds, technology businesses and startups hoping to achieve the opportunities created by Open Banking.

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The views and opinions expressed in the web site are subject to change based on the laws, market and other conditions. The information provided does not constitute legal advice and it should not be relied on as such. All material(s) have been obtained from sources believed to be reliable, but its accuracy at the time you read is not guaranteed. There is no representation or warranty as to the current accuracy of, nor liability for, decisions based on such information.

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