Closed systems and proprietary technology have traditionally characterized the banking industry. However, in recent years, there has been a shift towards open banking, which allows third-party providers to access bank data and services through open APIs. This is disrupting the industry and creating opportunities for innovation and growth.
What is Open Banking?
Open banking is a system that allows third-party providers to access financial information held by banks with the customer’s consent. It is driven by the desire to improve customer experience, increase competition, and foster innovation in the banking industry. This is made possible through open APIs (Application Programming Interfaces), which provide a secure and standardized way for different systems to communicate.
The Need for Innovation in the Banking Industry
The banking industry has traditionally been slow to innovate, but with increased competition from neo-banks and fintech companies, there is growing pressure to provide superior customer experience. Open banking has become a game-changer in the industry fostering innovation and competition, by providing customers with more choices and personalized services.
According to Forbes¹, open banking is the number one way that allows banks to participate in the current marketplace, especially regarding services and transaction speed or accuracy. This enables traditional banks to jumpstart their new product and service offerings, tailored to their customers’ needs. For example, customers could use third-party apps to manage their finances, compare products, and make payments, all through a single interface, reducing the complexity often associated with the financial industry.
Choosing a Tech Partner
Implementing open banking requires expertise and compliance knowledge, as banks must ensure compliance with regulations such as GDPR (General Data Protection Regulation) and PSD2 (Payment Services Directive 2). It’s important to choose the right technology partner to navigate these complexities.
The ideal tech partner for a bank is one with experience in the field, and one who can provide the necessary expertise and compliance knowledge, not only for open banking, but for technological innovations in general such as automation, software development, and many others.
Your tech partner should also be able to demonstrate the benefits of open banking and how it can improve customer experience and increase revenue.
> Read our article about digital transformation in the financial services industry.
The Best Tech Partner to Navigate This Sea
Open banking is reshaping the banking industry by creating new opportunities for innovation and growth. It improves customer experience, increases competition, and fosters innovation.
Banks that want to implement any innovation must choose the right technology partner to help them navigate the system’s complexities and ensure compliance with regulations. By embracing it, banks can provide better customer service and products to stay competitive in an increasingly crowded marketplace.
At NTConsult, we build and engage specialized teams of experts that help your business accelerate results through technology. We are experts in the banking industry, and have been working with companies in the financial sector for many years with some of the largest banks and financial institutions in North and Latin America. Our technology teams are led by banking specialists who possess a deep understanding of the core banking operations, extensive experience managing complex projects and complying with regulatory requirements.
As we work with nearshore LATAM-based IT professionals, we offer competitive pricing and English-speaking IT specialists who work synchronous with our clients’ time zones, are culturally aligned with the American market, ensuring real-time synergistic communication without language barriers between remote teams working on your projects.
Get in touch with us using the quick form at the bottom of this page, and let’s talk about your tech and business challenges. We are always ready to help your company achieve its goals.
Reference 1: https://www.forbes.com/sites/forbesfinancecouncil/2022/03/10/why-open-banking-could-usher-in-a-new-era-of-growth-in-2022/?sh=4399c9fec89a