open banking

There are plenty of open banking providers out there. However, it is crucial to know how to choose a great one and evaluate its offerings correctly. Let’s explore the open banking providers’ world and find out why a trusted provider is better than any other.

The meaning of Open banking provider

An open banking provider is a business that provides access to customers financial data via Application Programming Interface (API). It is like a middle man between a bank and a customer whose purpose is to help them communicate and provide data in an understandable way.

There are two main types of open banking providers – Account Information Service Providers (PISPs) and Payment Initiation Service Providers (PISPs).

The advantages of trusted open banking provider

When choosing an open banking provider it is important to pick the one that doesn’t compromise its profit over security and reliability. Only by working with the best, a business can gain access to the most brilliant opportunities and instantly utilise them. Here are four main advantages of a partnership with a trusted provider:

1. Competition improvement.

To a Fintech willing to enter into a financial market, an open banking provider can open doors to faster growth by tapping into the already established ecosystem of legacy banks.

Therefore, small businesses wouldn’t be eaten by major banks and could stand their ground against them. Open banking puts every financial service provider at the same level requiring comparatively minimal starting investment. Not to mention the on-site technological infrastructure, which can be almost eliminated. A great open banking provider will offer white-label service which enables a customer to utilise their established ecosystem of technical infrastructure. While doing so it also allows personalising the front-end to reflect the client’s brand identity and portray it as their own. 

2. Brand equity

The legacy banks have established relationships with their customers who trust their bank and are loyal. They have done it over the past decades and for a long time reaped the fruits of hard work. The new emerging Fintech, however, has no brand equity which makes it harder for a customer to trust them with their novelty services or products. 

Open banking is there to help bridge this gap and create a fairer environment for competition. Even more, the shifting consumer attitude and increasing need for innovative solutions in millennial consumers aid with the brand growth identity and becomes a disadvantage to legacy banks. 

3. Intuitive user interface.

The majority of challenger banks and TPPs come to the industry with a focus on the customer experience. They are willing to adapt to ever-changing needs and bring required innovations alongside. In fact, that is believed to be the most exciting reason why they join the industry. Consequently, they are performing frequent analyses and providing solutions to consumer problems. For instance, modern individuals use various apps to manage their finances and open banking providers here aid by allowing to aggregate that information to one intuitive interface and streamline the customer experience. 

4. Low development costs

Development costs and following new regulations can put a strain on TPPs budget while reducing profits to a minimum. To keep up with security and data privacy a company must have the technical expertise and build bespoke compliance systems while maintaining reliability. According to PWC’s 2019 Global FinTech Report, this is the biggest challenge for Fintech. 

Therefore, with a correct open banking provider, an emerging company can gain access to already established software development and fully compliant systems. Thus saving enormous amounts of money and countless years of developing it. Outsourced technical capabilities also mean zero maintenance, updates and legal requirement fulfilment. In some instances, an open banking provider can take over customer service which leaves a Fintech with minimal labour but maximises profits. 

Finding appropriate open banking providers may seem like a tricky business, but it is well worth the effort and time to make the choice wisely.

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