In a world that is ever evolving, so is our wants and needs. From streaming our favorite shows online to instant food delivery services or even booking a ride with a click of a button; our expectations have grown and changed drastically when it comes to consuming any type of service. The same falls true for banking, today’s customers expect much more with banking. With leveraging new technologies such as Open Banking, these demands can be addressed but that is not the only reason why Open Banking matters
Below are some of the areas in which Open Banking also plays an active role in:
- Empowering Users with Data Ownership
Data in the recent years has gained significant importance and became a key element to the success of many organizations the likes of Netflix, Amazon, and Google. As data has risen in value so did concerns regarding the privacy and security of data. Open Banking offers customers a secure way to access their financial information and gives them the control on who they decide to give or revoke access to it. By allowing customers to provide consent first, it puts the power back in their hands and recognizes them as the true owners of their data.
- Enabling Financial Inclusion
Open Banking empowers the unbanked population by allowing them to build better financial profiles that in return will allow them access to financial products and services that they haven’t been able to access before.
Know more about this in our previous blog on How can Open Banking accelerate Financial Inclusion in the MENA region here.
In addition, Open Banking also helps in supporting SMEs by significantly reducing their fees. With Open Banking, payments can be made directly and securely between any two entities be it customer accounts or financial institutions while significantly reducing costs and eliminating a third-party transfer medium. It eases receiving and settlement of payments for any user and especially for merchants and smaller businesses who can’t afford paying the interchanges fees that are commonly associated with setting up with payment networks.
- Playing a Role in Economic Diversification
Open Banking also plays a role in the economic diversification. The region is moving away from being oil-reliant economies by investing in other prominent sectors with a data-driven approach. Often, the second-best sector that contributes to the country’s GDP happens to be the financial services sector hence the focus on digitally transforming it, to ensure a robust financial industry. As a result of the future visions of the region, regulators have introduced Open Banking regulations to help accelerate the digital transformation agenda. Through secure and regulated data-sharing, Open Banking allows for healthy competition amongst financial institutions while also expanding and refining their digital offerings. Consequently, allowing the sector to grow even further and set new industry standards.
- Boosting Collaboration in the Financial Services Sector
Interestingly, Open Banking is not just limited to ‘banking’ and its benefits goes beyond just financial institutions. Open Banking enables connections between banks with fintechs and with other third-party providers (TPPS). It enhances and drives collaboration between incumbents and smaller tech companies, allowing them to build innovative solutions together.
Open banking matters because it serves many purposes and benefits all stakeholders within the sector. It allows us to re-think how we view and consume financial services from a user’s perspective, stray away from being oil-reliant economies in the region and help build a robust collaborative financial sector all while also enabling financial inclusion in the process.