The Open Banking Era in Payments
Arthur Bedel ?? ??
Co-Founder @ Connecting the dots in Payments... | Global Revenue at VGS | Board Member | FinTech Advisor | Ex-Pro Tennis Player
Open Banking is taking the world by storm! An Open API for financial institutions to securely share and manage financial data in payments & banking??
Still today, in 2024, most transactions happen using Cash or Cards. The card schemes, Visa and 萬事達卡 have been controlling the payment realm for decades as card transactions run on their network.
?? Open Banking disrupts that.
With access to payment data, Banks ( Chase , Monzo Bank ), and Payment Service Providers ( Nuvei , Adyen ) and 3rd-party providers ( Plaid , Tink ) can disrupt the traditional card payment model and cut out intermediaries by settling directly from the consumers' bank account to the Merchants.
Before Open Banking became available, consumer financial data was controlled by big banks. Now, consumers can manage their financial information and access it across different platforms — receiving a smoother, more personalized experience in the process.
But… what information will consumers be sharing:
?? Account type
?? Name on the account
?? Date of account opening
?? Transactions, amount & location
?? Account balance
?? Payment details
Open banking uses Application Programming Interfaces (APIs) which are software intermediaries that let two programs communicate with each other. While there are risks of using open banking platforms, APIs provide a measure of safety when sharing financial information.
Once a 3rd-party provider receives the data from your bank, it can use the information to offer you personalized solutions. Apps like MINT aggregate your data using open banking APIs, which consumers consent to when accepting the T&Cs.
From a Merchant perspective, this will:
??Reduce fraud tremendously by making sure the funds are available
??Increase margins by cutting out the middle-man (one less fee).
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??Improve conversion rates while improving the customer experience.
??Enhance security related to Payments for their consumers
??Etc.
Consumers have more control over their financial data and it provides access to more efficient and personalized digital money management tools.
Open Banking is not yet mainstream and here is why:
? Regulations: enabling Open Banking will face market restrictions and regulatory ones
? Early: the merchant and bank adoption rate is growing fast but still low
? Banking #infrastructures not ready yet.
? Lack of standards for Compliance
Other organizations such as Thunes are leveraging that same Open API through a collaboration with TrueLayer to create an agnostic payment network that connects consumers to banks, merchants, digital wallets and neobanks.
Open API’s will ultimately enable more FinTech services to be offered seamlessly.
More to come on this front ??
Source: https://lnkd.in/ghz4K2Q6 by Konsentus
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Principal Consultant SAfe 5.1 | ISO20O22 | GPP Finastra | SaFe Agilist Product| SWIFT |Payments | BA Payments UAT Testing
11 个月Great insight
My grave concern is about security. While banks may not be great, people have a broad level of trust that their funds will not disappear from their bank, whether justified or not. convincing people that JPMorgan isn't very safe and you are better off with an app from a start-up is going to be a very steep hill to climb. My sense is a more secure identity profile is likely to be necessary before it can be widely adopted. Just one man's view
I love reading about disruptors.
Digital Transformation Consultant @ Hafz | Digital Solutions Architect | Fintech | AI | IoT | Big Data | Data Analytics | Pioneering Fintech Solutions to Revolutionize Traditional Business Models
11 个月Can't wait to learn more about the Open Banking Era in Payments! ?? #excitingfuture
The self proclaimed, most influential person in payments. Except for Jack Dorsey or those two bros from that other company & definitely not Satoshi Nakamoto, but after all those guys it's me.
11 个月Exciting dive into Open Banking! How are you preparing for this fintech transformation?