For banks, there’s a constant push to adapt and innovate to new customer needs – people want easy, efficient and secure access to their own information.
But when it comes to delivering all of a customer’s data in one easy view, that is always easier said than done – especially when that customer has assets and financial data spread out across several different organizations. How can banks quickly and easily get that total picture?
The answer is in open banking – a streamlined way to securely aggregate client data and deliver a better experience for both consumers and banks. Today, we’re walking you through the basics of open banking, as well as the benefits you can expect when you make the switch.
What is Open Banking?
Open banking allows customers to share their financial data openly yet safely with financial services providers by virtue of banks giving access to data providers and fintech companies. Data is kept safe through a series of requirements set by the bank and agreed upon by those accessing the data.
Customer permission access to data is currently driven by financial institutions and managed through a bilateral data access agreement with data providers and fintechs. In return for sharing the data with third parties, banks pass down essentially a series of requirements to ensure the safety and security of the data. Technology providers and their customers must agree to these terms prior to gaining access to the data.
Open banking provides for the right of customers to share their financial data with (and between) their financial services providers to facilitate greater financial access (and as a result, greater market competition).
Advantages of Open Banking for Consumers
Open banking makes accessing data faster, while also making it more secure and reliable.
From a consumer’s perspective, every time they want to link an account, they’re redirected to their bank site to grant access to their third party, which essentially is a way of sharing credentials and giving someone else control of their account.
Using OAuth, apps like Wealth Access enable consumers to go directly to a single financial institution to input their credentials rather than giving their password to multiple third parties to create a living balance sheet.
Open banking also bypasses disruptions caused by multi-factor authentication. Traditionally, when a customer changes their password at the bank, they would have to go update each connected piece of software to maintain the connection.
With open banking, when a customer changes their password at the bank, it doesn’t affect the third party. They can actually change it as many times as they want. And because the API is used between the bank and the third party, it moves faster, more secure and certainly more reliable – fewer breaks. It really allows them to manage access to their Bank data and share it with who they want. So providing access and more control to share their data.
Advantages of Open Banking for Banks
From better views to increased adoption, the benefits of open banking extend beyond the consumer experience.
No more screen-scraping
Although screen-scraping was originally intended as a way to gather data for banking customers, it’s become more and more susceptible to nefarious criminals looking to steal private information. It is also a major contributor to slower systems and wasted resources.
The best way to address these issues is to eliminate the need for screen-scraping altogether. With open banking, data aggregation goes more smoothly with quicker connections and fewer disruptions.
A complete view
As an aggregator of aggregators, we know that at times banks need access to a customer’s total balance sheet.
Sometimes that includes data your bank can access via open banking, while also including other sources that may not be readily available, such as through insurance products or a credit card company that has yet to embrace open banking.
Our systems can deliver that customer’s entire balance sheet, including data from potential mortgages, hedge funds, and even real estate private equity.
By giving your team a view into a customer’s entire balance sheet, you can base your recommendations on the larger picture and offer better advice.
One of the common reasons that customers get frustrated in their online banking experience is link breakage. With open banking, you can all but eliminate link breakage and increase efficiency of the overall system, which can significantly increase user adoption.
This process also drives better transparency for financial professionals to provide more timely and accurate advice through a living balance sheet.
As open banking continues to be a favored choice in the banking industry, it’s important that your company remains up to date on the latest tech to provide the best possible experience for both your customers and employees.
Connect with Wealth Access
Our systems make open banking accessible for every bank from small to enterprise. Want to see how we could make it work for you?
Click here to connect with a member of the Wealth Access team today.