Banking is vital to the financial position of much of the country. It allows funds to be transferred from one place to another and can be done using modern technology or visiting a physical bank to complete the transaction.
In recent years, the shift to digital has been very apparent but that hasn’t stopped the need for physical banks. For less tech-savvy people, banks can do all the work for them making their lives easier. Even for a tech wiz though, there is still a need to visit a bank for certain things such as opening a child fund bank account or withdrawing money.
The digital age of banking has allowed innovation to thrive and from that open banking was born. Open banking has revolutionised how we handle our finances which has made banking online easier than ever.
This article will aim to educate you on the ins and outs of open banking and how it is benefitting society. Read on to find out more.
What is open banking?
Open banking allows third-party developers to build applications for banking practices using the financial data from banks and other financial institutions. In 2021, over 26.6 million open banking payments were made which shows just how many people are happy to use this system.
Ability to innovate
As with anything in this digital age we live in, innovation is at the forefront of everything and open banking provides a platform for just that. Some examples of this innovation include:
- Better communication for sharing personal data by integrating it into the application for the user to see.
- Price comparison sites utilising the readily available information to provide advice on the best accounts for people to open and which bank they should look to do it with.
These new ideas will continue to flow as more and more people use open banking in their everyday life.
What is the result of open banking?
The benefits of open banking are almost endless but two of the biggest benefits include:
Higher conversion rates
Allowing payments to take place on open banking solutions has increased the number of transactions that now go through. This is because the need for data entry is reduced which has led to more people completing the purchase.
This is because bank accounts can’t be stolen or skimmed as credit or debit cards can. They used encryption and tokens before any transaction can be completed.