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Open Banking and PSD2


Open Banking and PSD2

Selecting the right Partner


The opening of its APIs to third parties, through open platforms, the so called era of Open Banking, a trend that plays a fundamental role in future of digital banking and other types of online businesses in the financial ecosytem, as the best technological solution to open the data of financial institutions and banks to developers, startups and other partners in the Fintech world.


Open banking is the way of sharing financial information and transactions electronically, with customer consent and participation and with high security standards. Many financial services and solution providers along with financial institutions, banks and fintech have open access to consumer banking transaction and other relevant financial data. This approach and the way data is access is, of course, with the use of APIs. It will allow the networking of accounts and data across organizations for use by consumers, third-party service providers and financial institutions.


It is becoming a major source of innovation ready to reshape the digital banking and Fintech industry. These third-party providers APIs can use the customer’s shared data.


Global Open Banking market is segmented in the bases of type, application, and region & country level. Based on type, the market is segmented into cloud, on-premises, and hybrid. Because of application, the market is segmented into banks, fintech, retailers and financial institutions.


To make open banking possible in a completely regulated and secured ecosystem, the introduction and implementation of PSD2 disrupted the banking sector in Europe. This is part of a global trend in banking regulation emphasizing security, innovation, and market competition. By requiring banks and Fintech to provide other qualified payment-service providers (PSPs) connectivity to access customer account data and to initiate payments, PSD2 represents a significant step toward how to better monetize online banking and fintech sector.


PSD2 requires banks and other financial institutions to grant qualified third parties automated access to customer transaction accounts, covering both retail and corporate customers by enabling Fintech, large technology firms, other banks, and even certain retail organizations to go head-to-head with banks as PSPs purposes is to provide lower costs and higher security for consumers and to afford merchants greater flexibility to differentiate customer experiences, including payments.


Conclusion


Even Open Banking is the great alternative to the current financial ecosystem and other type of business as it mainly offers many advantages, but it also has some disadvantages, being the security risks of sharing data the most important obstacle.

On top of that, all financial institutions, Fintech, Insurtech, etc, must also be able to provide a commercial offer to third parties via APIs. Many more services will be provided in this way in the longer term.

Open Banking will change the way that we, as consumer and professional client, look at financial services. More competition and simpler integrations will lead not only to lower prices, but also to a superior service.



This blog is Sponsored by OB Scoring®


Fintech-Habor ´s aim is to provide best players in each of the digital lending landscape partnering with companies like Shuttle99.com who offers a comprehensive solution for your Open Banking Scoring models, with a solution like OBScore.com, turning Open Banking / PSD2 bank transactions into a scoring.


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