Most people have a bank account that they use for keeping their funds in and making payments. You may have taken out a loan or a mortgage from the bank to buy your home. Technology is always coming up with new options to improve and maximize the value that you get from your bank. Open banking allows consumers to use third-party providers more easily when it comes to using financial services, borrowing money, making payments, and more.
What is Open Banking?
Open banking describes a process of sharing information regarding a bank account. This is done with the consent of the account holder with an approved third party. It allows financial providers more efficient access to financial information, promoting new apps and services in the financial industry. Some of the main benefits of open banking include:
Improved Lending Process
With open banking, it may be easier or simpler to get or refinance a loan. Customers can simply use this banking to consent to sharing their financial information with a finance company or bank, instead of the lender asking for information collected from various sources. Yodlee account verification ensures that customer accounts are verified, and the process is secure, helping to reduce fraud.
There is a range of Yodlee account verification options for various purposes including lending, consumer payments, and more.
More Banking Tools
Consumers can get access to more helpful banking and financial tools thanks to open banking. It makes it easier for a wider range of third-party providers to access bank information and provide services that might have been difficult to offer in the past.
Along with this, there is more competition for banks, which has led to many banks deciding to improve upon the services that they offer in order to stay ahead of the third-party competition.
Stress-Free Accounting and Bookkeeping
Another way that consumers can benefit from open banking is that it offers a more stress- and hassle-free approach to accounting and bookkeeping. Small business owners and freelancers can simply connect their business bank account to an accounting app via open banking where records can be taken automatically from banking activity, reducing the need to enter them manually.
What Information is Shared with Open Banking?
Open banking allows you to share information with third-party financial providers, but the information is only shared when your consent is given. In general, payment and account information will be shared via open banking, and consumers retain some control over what data is shared and who it is shared with.
As open banking becomes more popular in the financial industry, some regulatory bodies around the world are developing new standards that determine how organizations must ask for your consent before accessing your information, and exactly who can see it.
If you’ve borrowed money or used online financial services, then you may have already heard of or used it. This technology is becoming more popular as a way to help consumers get better access to financial tools and products.
Also read: The Entrepreneur’s Guide to Improve Financial Literacy
