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The financial sector is part of a digital boom. Traditional banks are leaning towards modern trends and information is provided to the third parties ensuring secrecy of the bank. Let us understand why such things are happening, who are the people that require them and why?
Banking data and its disclosure
The inception of this trend was in Germany in the year 2010. Ever since the open banking project has gone on to gain popularity where support is extended to projects that disclose banking data. The influential banks of the country have gone on to extend support to the same.
In UK, with help and support of the government authorities, the open banking standard initiative was launched. Their aim was to enhance competition or enhance the accessibility of services among financial institutions. As part of the initiative it was decided that banks need to provide the third parties, so called the fin tech companies with information regarding account balances of customers. Even access to their current accounts are provided. As part of the module it was decided that open banking was made mandatory for 9 banks having its operation in UK. This goes on to serve more than 80 % of the population of the country.
API technology and its uses
The provision along with transmission of data is carried out by an open api banking or referred to as application programing interface. It goes on to include requests, commands with the aid of how computer applications interact and end up exchanging information with each other. It forces each other to accomplish actions.
An example of API usage can be the smartphone applications where users can check their balances, verify their bank account API, make payment and banking transactions can be undertaken from the smartphone.
The benefits along with prospects of an open API
A growing trend that is witnessed all over the world is an open banking API that is provided to organizations working in the financial sector. This modern form of innovation benefits bot the clients and the banks. An example is that it enables to develop a universal application of an app that can witness the information of each bank where the account holder has an account. Earlier for each bank a user needed to downloaded their own application that further complicated the choice of various services or offers that are rolled out by the bank
A multi- banking phone application allows the users to check the balance online and manage the accounts of various banks. The account operations are streamlined as you need to select a bank for making payments, a credit check in a faster way with the use of smartphone applications. It is possible to simplify or execute the mortgage applications that enables to determine the financial competence of an individual relying on smartphone devices. It makes the process of obtaining the loan an effortless task.
An easy access to the banking API provides numerous benefits to a bank
The banks have an option to extend their distribution channels for financial products relying on modern information systems and third party companies. There is bound to be development of numerous distribution channels as it enhances the potential ability to enhance the client base of the bank. In return banks will get uninterrupted level of services from third parties that makes it easy to navigate through the financial trends.
At the same time an open bank API, allows a chance to follow the new market from the interiors. Even it outbids the most successful company in the market to strengthen its own position in the market. It is quite obvious that the benefits of an open API benefits all the process parties. There is a need to understand on how this concept is applied in countries all over the world.
The experience in operating an open API in banks
In the USA, still there is a lack of regulation on the issue of open API banks. But a favourable financial environment did help in the creation of a financial aggregator company known as Mint. Their website was already used by more than 20 million people in the US and Canada in the year 2016. In Singapore an opening API was supported by the Monetary Application or MAS. It provides guidance for the financial sector to exchange financial data effectively and formulate the stage of innovative banking projects.
Read More: Simple REST API Go Using Revel Framework and CockroachDB
Best for business and individuals
An open API helps businesses along with individuals at a major level. Such a system requires end to end digital infrastructure as still some of the banks are not able to provide a personalized experience to the users. There are some open platforms that provide APIs, cloud computing, AI based analytics along with a high level of security that is necessary for banking transactions. Firstly digitalization is implemented in the banks to provide a seamless experience to the clients, customers or even the banks. But such an evaluation to spread its wings globally may take some time.
Since 2018, the European payment initiative was implemented in the European countries. There is an obligation on the part of financial institutions, and provides API to third party companies who are looking forward to be working in the financial sector. Such a move will enable to enhance competition in the financial smart phone segment, with the emergence of technology companies.
The various banks along with financial institutions have started to work together. But there is ample scope of improvement in an open augmented realty like components of virtual reality, digital advisors, augmented realty etc. This goes on to enhance the trust factor and gives customer experience a much needed pep up. If you are planning to fast track your open banking journey and stay ahead of the curve it is better to obtain more idea about open banking API.
When it is India, The stack open information API was catered so as to cope up with the demand of next generation financial services.
