Exploring Open Finance: A Vision of What is to Come with Open Banking

Several years since Open Banking was first launched, it has become clear that it has brought great benefits to banking corporations, businesses, and individuals. By enabling the safe exchange of diverse banking information through secure APIs with the consent of users, it has not only unleashed fresh ideas but has also improved the customer experience and helped companies save money. Open Banking offers plenty of advantages, laying the groundwork for the evolution of Open Finance. The latter intends to build upon these advantages, ultimately providing additional benefits to customers. Open Banking is the term used for the process in which financial establishments share data with authorised third-parties through protected APIs. These outlets use the APIs to pull up customer account details and start payments, all with the approval of the customer. The essence of Open Banking is to enhance transparency in finance, allowing customers to be given better accessibility and authority over their financial details. Open Finance is an advancement from open banking that encompasses a broader range of financial products and services. Open Finance has the potential to enable authorised third-party providers to access an array of customer information. This could pave the way for personalised financial products and services on a larger scale than what Open Banking has already accomplished. Open Finance and Open Banking share the same objective of granting consumers more authority over their financial data. However, due to its broader scope, Open Finance has the ability to unlock the complete advantages of Open Banking. At the heart of the matter, Open Banking and Open Finance diverge primarily in terms of their range. Open Banking, as practised in Europe, is focused on Account Info Service (AIS) and Payment Initiation Service (PIS), and is characterised by a restrained scope. Though this principle has undeniably allowed multiple businesses to present a variety of financial services, it only applies to payment accounts, thus, leaving out significant financial services like saving accounts, mortgages, investments, and pensions from the Open Banking network. In comparison to Open Banking, Open Finance presents a monumental advancement which could widen the scope of possibilities. Through its extended range of services outside of payment accounts, Open Finance offers greater surmountable possibilities with the promise of bringing increased benefits to both companies and clients. Essentially, Open Banking has streamlined payment processes and reduced costs and settlement times, but Open Finance is likely to go beyond these advances, providing a wider range of financial products and services. Existing systems have linked up with various account types, but Open Finance is expected to take these efforts to a higher level, causing increased use and significantly extending the scope of available information. At the moment, financial institutions and service providers are connected to a range of accounts such as savings, investments, pensions, etc. via several methods. However, with the arrival of Open Finance, this adoption will be further strengthened and it will open up even more connections. This could be seen as removing any existing obstacles and making it easy to access and link financial data. By taking advantage of Open Finance, the financial sector will benefit from improved connectivity to a wider array of financial accounts. This development not only expands the capacity of available data, but also provides a more detailed and unified view of people's financial situations. The result is a more effective, inclusive, and interconnected financial infrastructure that provides benefits to both users and industry participants. Open Finance is making its presence felt, its influence in promoting higher degrees of interconnectivity playing a critical part in crafting a future where financial data is available to all more readily and unified, thus paving the way for creative financial services and tailored user experiences. The trajectory of Open Finance is without a doubt evident -- it is forthcoming and set to build on the groundwork established by open banking. This progress seeks to create a more dynamic financial market, encouraging invention and giving customers more command over their monetary data. In light of recent events, it is important to note that Open Banking is not the end but merely a milestone in the ongoing revolution of digital banking. We are already seeing the conversation shift to the potential of open data, which moves beyond the limits of both Open Banking and Open Finance. As the financial industry changes, it is evident that the journey began with Open Banking is part of a greater story, with open data ready to be the next major part of digital transformation.

Source: https://medium.com/@fuzeapplications/beyond-open-banking-a-glimpse-into-the-future-with-open-finance-a70f4eaf2013?source=rss------fintech-5