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Open banking fundamentally changes the landscape of the modern financial sector, stimulating all types of companies to release new services and making traditional banking products simpler, and more convenient, while removing additional costs. Open banking became a global trend that triggers a price-competitive response to innovations across the financial sector. It unlocks new opportunities for every financial ecosystem participant: third party providers (TPPs) that integrate with bank channels, banks, companies that use TPP services to offer innovative solutions, end users, and the regulator that looks over so that the ecosystem works.
TPPs are authorised service providers who integrate with open banking channels and render to businesses innovative services on top of account data and payment initiation. They benefit from open banking by having a considerably broader opportunity to provide their services:
By using open banking tools provided by TPPs, companies build new services for end users and improve customer experience. But most importantly, these companies get an impetus for further developments of their business processes, unfolding other valuable opportunities:
End users are the main beneficiaries of the open banking movement; they’re the ones to use the services created by companies in the open banking framework. End users do not know much about open banking or might even feel hesitant and skeptical to use these services. That’s why governments and regulators must carry out broadscale campaigns to raise awareness about open banking initiatives. Open banking can considerably improve the quality of services for consumers:
Banks represent the foundation of open banking. The advantages of PSD2 interfaces for banks are not so obvious at first glance – the end user has opportunities to choose from more products and change providers, as a result of which banks need to make more efforts to remain competitive. Nevertheless, the banks themselves can also benefit from providing access to their open banking channels or connecting to the channels of other banks:
All relations in the open banking framework are regulated and controlled by national regulators, and can’t exist without established rules and standards. At the national level, open banking plays an important socio-economic role by helping all members of society to access innovative services and promoting informed financial behavior. The entire society will benefit from open banking:
Most of the listed values and opportunities have already existed on the markets of some countries before the introduction of open banking legal framework. However, they have not received proper distribution due to risks in implementation, high cost, or complete dependence on the closed banking API, the access to which has been open only to a limited circle of bank partners. The modern society is still in the nascent stage of exploring the real potential of what open banking can unfold for the whole financial ecosystem. Open banking is a major step towards taking benefits from a technological revolution in the banking industry which has been pending for a long time.
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