Evolve Bank & Trust is a leading bank and financial technology solutions provider. Their dedicated Open Banking division offers a wide suite of Banking-as-a-Service or “BaaS” products that enable financial services and transaction methods for a variety of businesses. In the following article, Evolve Bank & Trust discusses how open banking is transforming business, and the outlook on the future of banking.
The rapid growth of technology, such as application programming interfaces (APIs), has accelerated open banking to hit the mainstream at unprecedented speeds. The transformation is occurring quicker than many experts expected. But what actually is it? And what benefits can businesses gain by utilizing Open Banking solutions?
Evolve Bank & Trust explains that open banking has various meanings, depending on where in the world you are. In the United States of America, the term typically refers to banks utilizing technology to host accounts and provide transaction methods for financial and non-financial businesses to embed into mobile applications
Across Europe, open banking is typically associated with PSD2 or Second Payment Services Directive, which is a regulation in the EU for electronic payment services.
Regardless, APIs play a major role in it all.
With banks around the world continuing to transform their open banking policies by partnering with fintechs to simplify and improve processes and customer relationships, Evolve Bank & Trust says that the open banking shift is re-shaping the industry — and bringing a whole host of benefits with it.
The Open Banking Transformation Shift
Evolve Bank & Trust explains that new technology developments allow banks to collaborate closer than ever with third-party providers, establishing more choices for fintechs to create better user experiences.
Technology, like APIs, has primarily facilitated the transformation, managing to accelerate and streamline processes.
The experts at Evolve Bank & Trust say that specialized technology and APIs are allowing them to extend their banking solutions to new customer segments they may not have been able to reach traditionally. It’s a tectonic shift from the traditional route of end user acquisition for banks to Evolve Bank & Trust.
The 4 Benefits Open Banking Brings Businesses
The open banking and technology transformation has quickened innovation and allowed entities to address pain points found in tradtional banking. Many formerly manual tasks can be automated, and systems are increasingly available to integrate with each other, improving data sharing.
As Evolve Bank & Trust states, the open banking shift brings many benefits. But perhaps the four most advantageous benefits for fintech companies and their users are as follows:
#1 Improved Customer Experiences
Better user journeys can bring increased usability. Offering customers a mobile-first, seamless experience, can lead to boosted efficiency in managing their finances. With tools that match their needs more accurately, users can improve their relationship with money and manage it their way.
Open Banking provides the perfect opportunity to meet customers’ ever-evolving needs for better services, such as account comparison, credit applications, and personal management from one app.
#2 Quicker Settlements
New and enhanced payment methods, like real time payments and FedNow, are being developed to improve settlement times. When funds settle faster, end users can access and share funds quicker. For small businesses with limited cash flow, quicker settlements can greatly improve cash management, which is essential to operate effectively.
#3 Faster Onboarding Processes
One of the great aspects of open banking for businesses is data collection and sharing. Valuable insights into customer habits allow companies to speed up onboarding processes and tailor experiences to each user.
#4 Product Diversification
With the growing competition in financial services, product and offering diversification is key. It is essential to provide as much value to customers as possible. Offering users graphic visualizations of their spending habits or different ways to send an receive funds can help acquire and retain customers. Open banking is the heart of diversifying banking experiences.
