The financial services industry is already looking beyond open banking to open finance, or what Capgemini referred to as ‘Open X’ in the
Capgemini World Retail Banking 2019 report. Customer awareness of open banking remains negligible, and some account servicing payment service providers (ASPSPs) missed multiple deadlines for changes to dedicated interfaces. As a result, industry players
are being encouraged prioritise effective and structured collaboration, facilitated by API standardisation and shared customer data insights. In turn, this will create an integrated marketplace, where seamless exchange of data and services will occur, improving
customer experience, and expediting product innovation.
Driven by a shift in focus from products to customer experience, API standardisation will also reduce fraud, improve interoperability, increase speed to market and boost scalability, as discussed. According to the
Capgemini World Retail Banking 2019 report, open finance creates the possibility of an end-to-end, integrated experience for the consumer, even if their data and service needs span multiple organisations. From a consumer perspective, this means getting
a more holistic view of their financial information, most likely leading to better advice, reduction in operational effort, and error arising from copying data between service providers.
Regarding product innovation, open finance provides the access to consumer data – granted authorisation is given by the customer – that was previously not available. It thus creates massive possibilities around product innovation for financial institutions
across the board and there are almost endless possibilities that open finance brings out for new products.
Finconecta took this point further. When implementing open banking and open finance, financial institutions can benefit from introducing the ability to rapidly find and test digital solutions in an independent sandbox, integrated across with multiple solution
providers with one single integration, monetise APIs and tap into new revenue streams. Open banking, using APIs, allows financial institutions to be part of a much larger client base and ecosystem, transforming their business into a digital business, where
data-driven insights are tailored to the individual customer.
Summarising these points, Tink highlighted that open finance describes the ability for customers to enable third-party providers to safely access their financial data and to render it in the financial app of their choice. This means that open finance is
about empowering choice, competition, and innovation by democratising access to the customer’s financial information and services.
Access to financial data is already benefiting thousands of financial institutions and millions of customers. Instant access to financial data allows banks to create a complete 360-degree picture of their customers’ financial position. It allows credit institutions
to make instant and real-time comparisons between mortgages and identify opportunities for cost savings or value creation. Large insurers can also use financial data to anticipate claims and optimise claims management, thus enhancing productivity, reducing
errors, and lowering fraud.
For most financial institutions, this means that the biggest opportunity that open finance has to offer is improving the customer experience and building trust. Open finance has an opportunity to create seamless experiences, where the data works on behalf
of the customer. This allows the customer to complete an onboarding process, a mortgage request, an end-of-year report, or any other activity without the hassle.
AWS Partners and fintech firms have developed open finance solutions that complement cloud-based open API platforms and provide the solutions financial institutions need. With the cloud, financial institutions can scale APIs on demand, pay only for what
they consume, and build modern serverless architectures. Building open finance solutions on the cloud requires minimal capex and investing in this technology today will help financial institutions get a step ahead of industry peers.