Open banking is often referred to as a revolution, and in many ways these words are not exaggerated. For customers, open banking means convenience, lower costs, completely new services and possibilities. For companies, it is an opportunity to reach for one of the most valuable assets of the financial industry - in-depth information about the client. Importantly, this treasure of knowledge can be used by companies related to the world of finance as well as those that have nothing to do with it.
The list of companies that already benefit from open banking today is long and varied - from payday lending companies platforms to... furniture rental companies. To understand what attracts such diverse businesses to open banking, it is worth first explaining what open banking is all about.
Open banking is, in short, an environment in which banks disclose their customer data to external companies. Of course - not all data, not to all customers and not all interested parties. First of all, it is the customer himself who decides whether and with whom to share his data. Secondly, only authorized third parties (the so-called Third Party Providers, TPP) have access to the banks' systems and data, which will obtain the appropriate authorization from the financial market regulator (in Poland: the Polish Financial Supervision Authority). Third, access is standardized and automatic, using application programming interface (API).
The formal framework for open banking in Europe was created by the EU directive, PSD2 (Payment Services Directive 2). The directive, among others, defined the scope of shared data, technical and technological conditions of API functioning and imposed on banks the obligation to provide data to the above-mentioned authorized third parties - at the client's "request". In practice, this "application" is simply logging in to the bank's website via the application or website of the aforementioned companies, called TPP, of course after accepting the relevant policies and expressing consents" - explains Alicja Łosowska, Compliance Manager at Kontomatik.
Payday lending companies, including those offering online loans, were among the first to use customer banking data. This is understandable because among the available data, the customer's bank account history is the most important as it is an excellent basis for assessing creditworthiness.
In addition to the bank account, there are other trusted sources of data on the financial situation of a potential borrower. Although most of these databases have existed for years, using them was often time-consuming and ineffective for companies. Sending a single inquiry about a specific customer or working on complicated, unreadable reports directly extended the waiting time for a credit decision.
“Now we have solutions that enable efficient and mass communication between the company and an external data source. Such solutions are, for example, VSoft Connectors, thanks to which our clients notice significant savings, translating into customer quality or shortening the time of assessing creditworthiness. The use of connectors directly increases the number of customers and thus - increases in sales. " - says Justyna Jastrząb from VSoft, a provider of IT solutions for companies from the financial sector.
But there are more possibilities of using this data, and hence - companies that can use it.
Car rental companies or tenants can use open banking for similar purposes as payday lending companies. Information about the tenant's financial condition can save you serious trouble in the future. In Spain, where apartments are often rented empty, this information is used by the furniture rental companies mentioned at the beginning.
However, this is still only the tip of the iceberg, as the data collected in bank accounts exceeds the amounts of deposits, withdrawals, expenses and balances. They can be a mine of knowledge about the account holder's lifestyle. If a payment card is connected to the account, we can find out which type of shops and service points the customer uses most, how often and where he travels, and what online services he uses. This, in turn, allows us to present an offer ideally suited to his needs and at the right time. All thanks to the decision based on the best possible source of information - bank account. This source of information is always up-to-date and extremely reliable.
Although the data collected on bank accounts may be used by different companies from different sectors, not all of them will be able to use such solutions. Sharing data from a bank account is a kind of specific exchange: the customer shares his private information, because in return he receives a measurable, closely related benefit. It may be the possibility of quick loan obtaining, car rental or - for example - an application that aggregates data from several bank accounts in one place and on this basis proposes individually tailored financial solutions. Relatively few companies can offer their customers this kind of "exchange".
Open banking led to the emergence of new tools that can also be used by completely different businesses for e.g. identity verification - now it can be done without resorting to personal contact or expensive technologies of remote ID verification. The quick and cheap possibility of confirming the identity of a client or contractor will certainly be appreciated by many entrepreneurs operating on the Internet.
There are also other products and specialized analytical services based on financial data, offered by the aforementioned third parties (TPP). But how do you reach for these tools (or data stored on the bank account)?
By using the services of authorized suppliers.
One of them is Kontomatik, one of the European pioneers of open banking, already operating in over 10 countries around the world. Kontomatik delivers, analyzes and categorizes banking data in real time, helping companies make better business decisions.
Kontomatik solutions based on the banking API provides companies with customer identification (verification of the account owner's identity), aggregation of accounts and types of accounts, precise customer segmentation, analysis of financial behavior, verification of data and financial flows, verification of payment discipline and account holder's obligations, categorization of banking transactions, analysis of financial behavior, or enrichment of scoring models.
The possibilities of using open banking and its benefits are huge. A whole range of companies concluding transactions and exchanging data via the Internet will appreciate the advantages of confirming the identity of customers or contractors. For financial intermediation companies, accurate information about the client will allow them to build a cross-selling and up-selling offer tailored to the client's needs.
The potential is immense. All you need is an idea how to use it. Contact us here, if you would like to talk about opportunities for your company.