What is open banking?

There is no universal definition of open banking. But generally, the common goal of open banking is to allow consumers to authorise regulated third party providers (TPPs) to access account data held by their Providers so that a service can be provided. The data disclosure between the account provider and TPP is completed securely using Application Programming Interfaces (APIs).

What is open finance?

Open finance is the next step on the journey from open banking. Instead of simply sharing data from payment account, the data available will cover all areas of finance. This means customers could connect their current accounts, savings accounts, mortgages and credit cards with their pensions, investments, insurance and other financial services too.

As we are seeing in Australia, consumers are now able to see all their banking data held by different financial providers in one easy-to-use dashboard. This will give all parties a complete financial picture, making for much more reliable insights.

What is open data?

The next step beyond open banking and open finance is open data. This means going beyond financial services. It’s connecting account data from other sectors such as energy / utility and telecommunications and in some countries it extends to personal health and government records as well.

The goal is that one day consumers and firms will be able to see their complete financial picture all in one place. Some people refer to this as “open data economies”.

What are the benefits of open banking, open finance, and open data?

Benefits for customers:

- Aggregated view of all their financial and non-financial accounts in one dashboard
- Better and more tailored product offerings
- Easier identification of opportunities to reduce expenditure and save money with the added advantage of moving the savings into the right savings products
- No need to provide personal information many times over
- Hassle-free paperless services
- Better oversight of all financial income and expenses allowing for instant application decisions rather than waiting days or weeks.

Benefits for banks who adopt open data beyond the compliance requirements:

- Holistic client information for credit checks and lending
- 360-degree client views for better campaigns and marketing
- Become more competitive with hyper-personalization
- The potential for revenue-driving partnerships
- Streamline costs and resources
- Faster time to market for new products.

Benefits for TPPs:

- Easier access to customers and potential customers
- More complete data to create insightful products
- Better potential to partner with banks and other TPPs
- Faster and more secure transactions
- Expanding globally becomes more achievable.

Source 10x Banking

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