The Advantages of Open Banking - Read Access

Open Banking is a technology that allows data recipients to initiate payments, switch providers and fetch data from a consumer's account. This technology has sparked a new era of financial services. It enables businesses to improve their services, reduce costs and create engaging customer experiences.

In this blog series, we will look at some examples of how companies are taking advantage of the Consumer Data Right (CDR), and consider how Open Banking will shake up the finance industry in Australia as we know it. This first installment of the series will focus on some of the use cases that arise from accessing consumer banking data.

SME Finances

The rollout of Open Banking will ensure that smaller players, such as small and medium enterprises (SMEs), can play a bigger role in the distribution of financial services. Open Banking will see SMEs such as FinTech start-ups on a level playing field with some of the bigger players in the banking industry, including the Big 4 banks. SMEs can take advantage of the opportunities offered by Open Banking in the following aspects:

Automated accounting and account aggregation

A software with access to business current accounts, real-time transactions, and balances with Open Banking will be able to gather all account data in one place. This way, accounting providers can provide a single centralised feed for their customers – both businesses and contractors. This feed will be a hub for automated cost analysis, income tracking and tax reporting.

One example of a company that has already started to employ CDR in this regard is Intuit’s Quickbooks. Quickbooks has become an Accredited Data Recipient (ADR) to request bank data of the users of its accounting software to directly feed into its software platform to generate tax returns.

Credit assessments

SMEs will be able to access funding more efficiently by enabling the lending sector to have full access to their financial reports to make informed decisions and provide same-day transactions of funds.

Easy onboarding

With the increased access to crucial consumer banking data, industries such as (but not limited to) lending, rental, and iGaming can accelerate the affordability verification and KYC (Know Your Customer) processes.

Account and identity verification

The simplification of onboarding for services like financial exchanges, legal and accounting professionals, bookmakers, and realtors will be enabled through Open Banking. With such open access, account ownership and identity details can be verified directly from the user's bank account. Therefore, the time of outsourcing the verification process or asking for the manual upload of documents will be reduced entirely.

Quick affordability checks

Both spending and income information paint the picture of a customer's affordability. These affordability checks can automate the laborious rental process, where bank statements and letters of employment are typically required. It can also give automation to online exchanges and iGaming providers.

Automated forms

Just like much of the affordability checks, the process of filling in applications can be automated as well. Applications for opening accounts at new financial service providers or loan applications can be automatically completed in the applicant's name for information like identity confirmation, spending, or income breakdowns. Such a process will vastly reduce customer friction and drop-off rates.

Income verification and estimation

With Open Banking, users will no longer be required to report income manually. For example, the lending process can be automated through a third-party company that delivers "income guarantees". Through open access to user's data, they can provide a business's employee with their wage or salary upon request.

Personal Financial Management

Open Banking can help financial services providers create a more engaging user experience for their consumers through directly accessing their banking habits. This way, they can offer applications or services specifically tailored to their customers, increasing their overall satisfaction.

Optimised budgeting

Based on a consumer's spending habits in ratio to their income and costs per month, Open Banking enables services to provide their consumers with detailed spending analytics assistance. This can help them organize and manage their money better and learn valuable insights on saving and how much each week/month based on their needs. Numerous FinTechs are already using CDR data to develop apps to allow customers to see all their financial information in one place, and to provide financial management services. Examples include Credit Simple’s ‘Money Simple’ tool, which allows users to view their credit score alongside account information from their banks.

Customised portfolio dashboards

Service providers can offer interactive, consumer-driven dashboards that display their user's historical spending reports, income insights of all current accounts, loans, and credit card activities. All these will be based on the specific user's banking habits.

Virtual assistant services

By accessing their banking data and financial position, businesses can provide their consumers with digital assistants that will be able to give recommendations on saving, spending, and investing. Through real-time access to banking data, users will be provided with investment suggestions or spending reminders when they go overboard.

Fiskil is assisting forward-thinking business and ambitious founders to gain access to Open Banking data and implement these use cases. If this applies to you, or you simply want to learn more - Get in touch!