The changing face of banking
In simple words, it is standardizing access to banking data and making it available in real-time to
customers so that they can manage their finances better.
Cequity Inhouse | July 19, 2018, 09:20 IST
Over the past two years. India has granted new banking licenses, introduced the Unified Payment Interface (UPI) to ensure inter-operability, conducted demonetization to increase digital payments, has implemented a set of APIs (Aadhaar, eKYC and DigitalLocker etc.) and even rolled out it ‘s own payment app-Bharat interface for Money (BHIM) to enable payments from any bank 24/7 in real-time. So, what does this tells us about the Indian banking industry?
With the PSD2 directive kicked in Europe and open banking now a reality, the steps taken by India is a calculated approach towards inculcating an open banking culture here. As a true measure of openness, around 270 million Aadhaar driven accounts were opened and digital payments through cards and wallets soared to an all-time high.
So, what is open banking? In simple words, it is standardizing access to banking data and making it available in real-time to customers so that they can manage their finances better. This calls for the banks to innovate and be a part of an ecosystem of financial providers such as Fintech companies.
With open banking, banks will eventually move from a pipeline model –where the bank creates, owns and distributes its products and services on its own - to a platform model, where it acts as a marketplace of the best available financial products and services.
However, there are many challenges ahead in adopting open banking. Proper regulation regarding flow of data will have to be in place and cybersecurity vulnerabilities needs to be checked to maintain consumer confidence. Customers will have to be made aware of the open banking benefits.
Huge amount of data that will be generated due to inter-operability between banks will have to be properly managed and tapped into to enhance customer experience by planning new products, services and business models. Banks that put customer centricity at the core of their strategy and build close relationships with their partners (vendors and Fintechs) will stay ahead in the game.
To know more about Open Banking and what banks can do to stay ahead, please read this whitepaper
To know more GDPR and how data regulation will change in India, please click here