Open Banking has been the buzz phrase of the financial industry for the last couple of years but now there’s a new kid on the block; Open Finance.
Open Finance presents an innovative ecosystem of finance, positioned as the future of fintech, so let’s figure out what exactly it is.
How have we got here?
First, let’s start with Open Banking.
This is essentially the foundation from which Open Finance is being built. Rather than having three different accounts with three different banks on three different apps, you can see all your accounts in one place. This also allows customers to identify ‘problem’ areas to manage their finances better.
Open Finance is the next step.
Rather than solely looking at accounts, Open Finance will provide a holistic view of a customer’s financial health. Pensions, investments, property equity — all will be visible and at your fingertips.
Insights will be open for viewing and changes can be made easily, without receiving conflicting data from different sources. The longer-term aims include offering financial advice and improving financial education.
So, how close is this dream to becoming reality?
Open Banking hasn’t been adopted as widely as was hoped and there are barriers to implementing Open Finance.
Consumer consent is needed to share data between parties and while consumer awareness is low, studies suggest consumers are more likely to share data knowing it will ease financial stress.
There is also concern from companies that shared data will give competitors an advantage but, with a regulatory framework and reciprocal sharing, the benefit for consumers will be at the forefront of business decisions.
Customers do not need to know about the technological advances that have brought Open Finance to market but, increasingly, companies are moving towards the Open Finance ecosystem due to its benefits for both providers and customers.
mmob’s use of Open Finance
Open Finance is the core component of mmob’s Intelligent Partnership Platform, enabling clients to embed financial services into their user experience and share data to avoid unnecessary delays.
With Open Finance, clients can understand how their products are being used with accurate data insights, provide actionable advice for customers’ benefit, and effortlessly control the customer journey. mmob have placed customer interaction at the heart of the platform and Open Finance provides the vehicle for innovation in all aspects of business.
Samantha Seaton of Moneyhub described Open Finance’s advent like “the discovery of electricity”.
While switching candles for lightbulbs didn’t change much immediately, no one could envision the wide opportunities electricity enabled and soon, no one could remember how we lived before it.
Open Finance will be the same. Before long, we won’t believe we used to log in to different sites to manage our finances, transfer funds or apply for a loan. Everything will seamlessly be in one place and, more importantly, money will work for the consumer, rather than the other way around.