Everything you need to know about Open Banking

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A relatively recent term, but increasingly present in today's world, Open Banking promises to offer greater control over information , more transparency and a greater capacity to manage financial assets.

What is Open Banking?

This is a process that allows financial information to be made available to third parties (banks, payment services, etc.) with prior authorization from customers , in order to obtain access to new features. This information may include bank details and transaction and payment history, among others.

Information is transferred via an API – an application programming interface – which israel whatsapp number database communication between different entities in a secure and integrated manner. It is important to emphasize that one of the ideas behind the concept of Open Banking is reflected in the principle that customer data is their property and is only transferred to financial institutions if customers so wish.

Let's look at some examples of what Open Banking allows:

Account aggregation : several applications or interfaces are already available on the market that allow you to view and operate bank accounts from different entities in one place.
Opening bank accounts : the information required to create a new account is easily and quickly communicated to the entity, which provides a much more satisfactory user experience.
Personal finance management : having all your information consolidated on a single platform allows you to have greater control over your finances and gain insights that can help you make better decisions. Good examples of this are the already famous fintech applications , which allow you to sort your expenses by category, see the performance of your financial applications or make transactions in a simple way.
Instant credit analysis : with access to all the information needed to assess customers’ credit risk, financial institutions can speed up this process, improving the customer experience. On the other hand, customers can also use comparators and other tools to find the entities most likely to grant them credit.
Additionally, by sharing information with certain entities, it is possible to obtain feedback and suggestions that aim to improve our economy, such as tips for managing budgets , price comparisons , updates and notifications , and even fully personalized investment advice – an advantage for those who cannot count on an advisor.

The advantages of Open Banking
Whether for banks and other institutions, or for customers, the benefits of Open Banking are numerous: for the former, it allows the creation of personalized solutions and offers an improved experience ; for the latter, it facilitates access to a range of options available on the market, both in terms of services and providers, in addition to providing greater control over information .

This list allows you to have a more detailed view of these advantages:

Personalization of financial products and services : entities will have access to more information, which will allow them to adapt their offering to the needs and conditions of their customers.
Lower costs : given that intermediaries are excluded and that technology will become increasingly ubiquitous, the costs of these services could be reduced.
More products and services : In addition to personalization, customers will also have access to a wider range of financial service providers and more services.
Centralization of information : with Open Banking solutions it is possible to have all our products and services, such as bank accounts, credit and debit cards, loans, mortgages, investments, etc., on a single platform.
Better user experience : by accelerating the usually complex and bureaucratic processes associated with financial products and services, customers will be able to enjoy simpler and more agile experiences.
Increased security : with greater control over data, there is also greater supervision and more rules that entities must comply with in order to protect that data. The obligation to implement a strong authentication system is one of the rules aligned with this objective.
What information is shared?
One of the main concerns related to Open Banking is the information that is shared with entities , which may vary from service to service. The information to be shared, as well as its purpose and the validity of such sharing, should be clearly indicated in advance.

In addition to knowing that information only

will be shared if this is authorized by the client, it is also important to know some of the elements in question:

Personal information : name of the holder(s), address…
Banking information: account type, associated currency, opening date, balance…
Transaction history: operations carried out, trades, direct debits…
Is Open Banking safe?
There are potential risks associated with any system and Open Banking is no exception. The most common dangers are those related to information leaks or hacking, in addition to the risks inherent in data processing.

However, features such as strong authentication and consent management help keep data secure – these are implemented by banks and other entities as a way to comply with current regulations. Strong authentication, or two-factor authentication, is an extremely strong system of identity verification . Consent management, on the other hand, gives the customer the power to decide what information is

shared, with whom and for how long . Additionally, anti-fraud mechanisms are also common in most financial institutions.