What is Open Banking and how will it affect Financial Institutions’ mission-critical business areas such as lending, deposit growth, and insurance?
In an article by Justin Pritchard posted on The Balance, he provides a clear, concise definition of the buzzed-about topic. “Open banking is the practice of sharing financial information electronically, securely, and only under conditions that customers approve.” Open Banking gives the power to the consumer, allowing them to manage, control and use their money in a completely customizable way. The days of only being able to write checks to make a payment is gone. Zelle, Venmo, and PayPal have made the act of transferring money from one account to another incredibly simple and instantaneous. The convenience of this has not only made consumers’ lives easier but more efficient and productive.
I know what you’re thinking: where’s the catch, and is it secure? What’s to stop these third-party vendors from sharing consumer information? According to OpenWrks, the consumers are the owners of their own data and are the only individuals who can authorize any connection between the financial institution and a regulated third party. These third-party APIs, such as Zelle and Venmo, have endpoints built-in and regulated by the banks themselves. This means that the customer’s money and information are as secure as they are inside the bank itself.
Bill Streeter at the Financial Brand (thefinancialbrand.com) has noted that Open Banking “provides the opportunity to increase the market scope, to offset diminishing payment revenue streams and, perhaps most importantly, can help position an institution as a provider of the best products and experience.” There are, however, a couple of things that you as a financial institution should be aware of when getting into the Open Banking market.
Flexibility with your core provider is key. Selecting a vendor agnostic core middleware robust enough to support regulatory changes would offer your institution the ability to acquire an innovative core platform, granting you the flexibility and customization your Financial Institution needs in order to keep pace with the growing Open Banking market.
What if I told you that you could make your proven core platform vendor agnostic?
With NXTsoft’s OmniConnect solution, your institution can seamlessly connect and integrate with any LOS, P2P service, POS, CRM, GLC, etc. and eliminate any type of service disruption often caused by major updates and new releases from the leading core platform providers. What value would this create for your business and to your customer transactions and experience?
OmniConnect integration solutions are vendor agnostic. They can connect any CRM, GLC or third-party API solutions available in the market today. They make the seamless flow of data effortless for your employees and your customers.
Selecting a consultant to assist with integrating your systems should not be taken lightly. Do your research, and review references, account age, key competencies, and standard deliverables for the service you are contracting. If even one key component is missing, your financial institution could be at risk of surprise charges, partial or limited functionality, and a world of frustration.
Related Reading From The NXTsoft Blog:
APIs Open The Collaboration Door
Securing APIs in an Open Banking Platform
FinTech Industry Trends Point Toward Banking Partnerships