Open Banking is still a relatively new concept to many and despite the UK hitting the 7 million milestone of Open Banking users*, many people may be using Open Banking without them really being conscious of it. So, who uses Open Banking and who can it benefit?
Open Banking is a system that allows third-party financial service providers to access financial information, with the user’s consent, from various financial institutions. It has been adopted by various stakeholders, including:
Individuals use Open Banking to access a consolidated view of their financial information from multiple accounts held at different banks or financial institutions. This can help them manage their finances more efficiently, track spending, and discover personalised financial products and services.
Fintech companies, startups, and developers use Open Banking APIS (Application Programming Interfaces) to create innovative financial products and services. These can range from budgeting apps and investment platforms to loan comparison tools and personalised financial advice services.
Banks and Financial Institutions
Traditional banks and financial institutions can also leverage Open Banking APIs to enhance their own digital offerings. They might develop new services, collaborate with Fintech partners, or improve customer experiences by integrating external services seamlessly into their platforms.
Regulators and Governments
Regulators and governments may promote or mandate Open Banking to increase competition, innovation, and transparency in the financial sector. They might require banks to provide secure APIS that allows customers to share their financial data with authorised third parties.
Open Banking can benefit businesses by enabling more streamlined payment processes, easier reconciliation of transactions, and access to financial data that can help with cash flow management and financial planning.
Companies that provide technology and infrastructure for Open Banking APIs are another key user group. They build and maintain the interfaces that facilitate the secure exchange of data between financial institutions a third-party developer.
Payment Service Providers
Open Banking can be used by payment service providers to initiate payments directly from bank accounts, bypassing traditional payment methods like credit cards. This can lead to faster and more cost-effective payment processes.
Account aggregation services
Some platforms offer account aggregation services, which allow users to see a comprehensive view of their financial accounts from different banks in one place.
Credit scoring agencies
Open Banking data can be used by credit scoring agencies to assess an individual’s creditworthiness more accurately, as it provides a more detailed and up-to-date financial picture.
It’s important to note that the adoption of Open Banking varies by region and is influenced by factors such as regulatory environment, technological infrastructure, and consumer willingness to share financial data.
*Statistic Source: Forbes.com