Open Banking by design has put strong market incentives and regulatory nudges for banks to become modular, to focus on economies of scope and to consider creating business ecosystems as a part of their future strategy.
Open Banking evolution seems to have tentacles that span from basic use-cases which are enabled by mere provisioning of banking data through APIs, to sci-fi use-cases which will require a much larger strategic alignment between banks, fintechs, and non-bank partners in terms of their business models, cultures and of course technology architectures. .
The Os of Open Banking
Open APIs: APIs can be termed as Open APIs when they follow established and accepted technical and functional standards to offer interoperability benefits to the participants.
Open Payments: Open Payments enable consumers and third parties to initiate payment disbursements and/or collections. It enables digital payments to leapfrog the dependency of using intermediaries such as cheques, cards etc. to transact while ensuring security and customer consent requirements.
Open Accounts Information: Open Accounts Information enables customers to get an aggregated view of their account information including all debits and credits that have happened over a period of time. This aggregated view unearths behavioural insights that can help consumers improve their financial decisions and activities. The insights can also help financial institutions improve their customer engagement and product development initiatives.