Until recently, financial data has remained an untapped powerhouse of insights. Since Open Banking gained traction in Europe and several other continents, this data is empowering customers instead of being locked away in banks’ vaults. Data insights have become a part of virtually everything financial organizations do.
Open Banking’s motto is simple – banks must share user’s financial data with third party businesses with their prior consent. In turn, businesses can use this data to develop innovative products and services for everyone. The main idea is to give users a clear picture of their finances and more control over payments and saving habits.
That said, data has become the fuel of the financial industry and driving everything from decision-making to offering new services. However, the question remains how actually financial data opens up the market for new possibilities. We have identified three such ways –
- Empowering consumers to understand their finance better
- Disrupting monopolies and enabling data-driven services
- Pushing financial innovation
Empowering consumers to understand their finance better
The new data-driven era not only helps banks and financial institutions but also enable the end-users to have a clear picture of their finances. They can now track their spending patterns using Personal Finance Management (PFM) solutions. PFM apps connect with bank accounts, credit/debit cards, mobile wallets to keep a track of your spending and generate insightful reports. It opens up several ways you can learn about your finances and how you are spending the money.
Open Banking also paves the way for new and innovative solutions that makes the life of users easier. It enables banks and businesses to put consumers more in control of which:
- products and services they wish to avail related to their finances and
- the channel they wish to choose to make purchases or transfer money.
Read more about how Open Banking brings more control to customers here.
Disrupting monopolies and enabling data-driven services
Leveraging financial data is not only empowering banks to serve customers better but also opening up the playfield for third party businesses. Banks are now no longer alone offering financial services. Using financial data, businesses are learning about user behavior, choices, and preferences to offer services accordingly. This allows them to target their customers with specific products and services more accurately. For example, a financial company could see that a user is buying a lot of stuff from an e-commerce portal. Using this data, the company can offer a personalized credit card that can give earn reward points every time the user purchases something from that portal.
Pushing financial innovation
Being able to assess a customer’s finances and spending patterns offers valuable insights into their financial needs. It enables banks and financial institutions to build solutions that offer – personalized advice, user-friendly payment options, help users make better decisions, and remove the stress of managing one’s finances. This creates great opportunities to disrupt the entire industry with new-age services that are based on users’ choice and preferences.
To conclude – Being data-driven brings new gateways for business across industries. This opens up space for innovation and a range of solutions that can impact people’s lives.