Open banking and the future of banking

The relationship between commercial banks and their customers has undergone a massive change in the last few years. This change is evident when one notes the primary means of interaction between banks and banking consumers. Today, almost three-fourth of the entire banking consumer community interacts with the banks via the digital medium. Be it the banking website, or the mobile application, or the third party financial interfaces, transactions are made between accounts and across banks over the internet. Footfall at banks has decreased drastically, forcing banks to focus on their investment in the digital front.

Every commercial bank today is working extra hard to enhance and improve the digital banking experience of their customers. The banks are employing a wide range of techniques and strategies to streamline the digital interaction of customers so that online financial transactions become more simple, trustworthy, and convenient. It would not be incorrect to say that several of these strategies have been proven to be effective in making customers happy. Here are two of the most significant strategies.

Open banking:
It refers to the technology which enables third party financial applications to access your bank account details. It facilitates seamless money transfer from one account to another over a single interface. These applications allow customers to use the interface through simple tools such as phone numbers and QR codes. This form of banking has made financial transactions extremely easy and fast. You need not even log in to your banking application or website to conduct a transaction if your account details are registered in the third-party applications.

Now, commercial banks are focusing on making this experience secure. Although these third-party applications are allowed to access the bank account information of customers, transactions cannot be initiated without active input from the customer. The challenge which the commercial banks have accepted in this regard is to make this act of active input from customers more engaging and un-hackable.


Banking technology:
It refers to the statistical analysis of a customer’s bank account usage volume, value, and frequency. The analysis helps commercial banks to draw a financial persona of the customer and predict his or her spending pattern. In this way, the banks can target the customer’s area of interest and encourage him or her to use the bank account. The services offered by the banks can also be personalized based on the financial nature of the customer and advertisements of those services become more targeted and personal. From the perspective of the customers, banking technology is beneficial too. This technology allows banks to offer the most relevant services to the customers, saving their time and research efforts.

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