Why is Open Banking the Future of Finance?

May 26, 2022

Learn about the financial possibilities offered by open banking.

With the constant innovation of financial institutions comes Open Banking, which proposes to release all banking information to customize financial services and tailor them to the users’ needs.

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

Banks must allow third parties to access their systems, provided they give their consent. In exchange for this information, said third parties will provide their services to the bank. In order to do this, they must first become duly regulated entities supervised by the relevant authorities so that they provide security and transparency to all parties involved.

For example, when buying a car, the company will be able to offer you a financing plan in real time with the best conditions for you, since they will already have access to your bank information. This way, processes such as loan applications can be fast tracked. This favors credit and loan institutions, particularly, by helping them offer customized products. Thanks to Open Banking, other types of companies can provide multiple kinds of products, ranging from app development to centralization of financial information (even if it belongs to different banks or entities), to concentrating various payment forms.

What advantages does Open Banking offer to its customers?

  • Personalized Products and Services: Thanks to data release and information provision, financial entities have a better understanding of their customers’ profiles and can offer products or services that are more suited to the customers’ needs.
  • Greater Products Range: Opening up to more suppliers allows an increase in the products and services offered, widening the range of choices.
  • Cost Reduction: Thanks to the use of technology and the elimination of intermediaries, the costs of a given product or service 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 operations security.
  • 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 belong to different entities.

What are the challenges and opportunities of Open Banking?

Adapting the financial system to the new Open Banking environment, where customer information is shared by third parties and the intermediaries of certain bank services can be eliminated, is not without its problems, since the fact that external entities and providers deal with sensitive financial and personal data might result in information misuse.

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 customers’ needs while maintaining high quality and safety standards. Contact us and learn about the benefits that Syncfy offers to your business.

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