The financial services landscape has undergone a seismic transformation with the advent of open banking. This groundbreaking method enables customers to exert more control over their financial information, simultaneously unlocking a wide array of state-of-the-art financial services applications.
Conventional brick-and-mortar banks have transformed into comprehensive service hubs, adeptly catering to the ever-changing requirements of today’s consumers.
At Stfalcon, we are at the forefront of fintech software development, equipped with proven expertise to help you create a groundbreaking financial services application. Whether you are launching a new venture or seeking insights into the potential of this banking trend, this article is a must-read. Join us as we explore the fundamentals of open banking & delve into eight innovative open banking solutions that are reshaping the market. Prepare to be inspired by the limitless opportunities of open banking!
What Does Open Banking Platform mean?
The open-source mobile banking platform represents a revolutionary approach that reshapes the payment landscape, allowing authorized third-party providers (TPPs) to access a customer’s banking data via secure application programming interfaces (APIs). This access is exclusively granted with explicit consent from the customer, empowering them with complete control over their data-sharing preferences.
The operational aspects of open banking entail TPPs acting as intermediaries for bank customers to provide two core services:
- Account Information Services (AIS): This service allows customers to conveniently access and consolidate information, including account balances and transaction history, from all of their bank accounts within a single centralized platform.
- Payment Initiation Services (PIS): PIS streamlines the online payment process for customers, eliminating the need for manual entry of credit card details. Instead, customers can securely authorize payment transactions directly from their bank accounts.
For a clearer understanding, let’s consider a money manager app as an example. In a non-open banking scenario, consumers must individually interact with each of their banks, logging in & manually transferring relevant data to the application. This process can be time-consuming.
Open banking apps streamline the user experience. Customers provide the TPP with permission to access their banking data, and the TPP utilizes open banking APIs to fetch information from all the user’s accounts, aggregating it within a single, user-friendly interface. Consequently, users can effortlessly access their transaction history, account balances, and spending details with just a few clicks.
Open banking apps also transform payment processes. Through collaborations with PIS providers, customers can effortlessly make online payments. Instead of manually entering personal card details, users can click on a payment link or scan a QR code on the merchant’s website. They are then redirected to their bank app to confirm the payment, all without divulging their sensitive bank information to the merchant.
In the realm of payment solutions, open banking is a transformative force, providing customers with heightened convenience, fortified security, and unprecedented control over their financial information.
Existing Solutions in the Market & Key Trends
The open banking sector has experienced swift expansion, with several established solutions gaining favor among both consumers and businesses. Here are a few notable examples of offerings within the open banking market:
- Payment Initiation Services: This solution empowers consumers to execute direct payments to merchants from their bank accounts, eliminating the necessity for card-based transactions.
- Account Aggregation Services: These services grant consumers the ability to access and oversee all their financial accounts, irrespective of the financial institution, through a unified platform. This streamlines financial management and offers a comprehensive perspective on one’s financial status.
- Personal Financial Management (PFM) Tools: Personal finance management (PFM) tools provide tailored insights into an individual’s spending habits and overall financial well-being. They offer suggestions on saving money, decreasing debt, and enhancing financial planning.
- Lending Platforms: Leveraging open banking data, lending platforms provide access to a diverse range of lending products with competitive rates & terms for both customers & businesses.
Although the open banking industry is in its initial phases, it is progressing swiftly and poised to usher in profound transformations within the financial services sector in the foreseeable future. As open banking garners broader acceptance, we foresee the emergence of pioneering solutions and services that will revolutionize the ease, convenience, and security of financial management as never before. With both consumers and businesses embracing the potential of open banking, the financial landscape is on the brink of experiencing substantial growth and remarkable enhancements in inefficient financial management.
How Do Open Banking APIs Work?
Open banking Application Programming Interfaces (APIs) have a pivotal role in ensuring secure access to customer data and enabling third-party providers to initiate transactions. Let’s explore the inner workings of open banking APIs:
Before a third-party provider can access a client’s data, explicit consent is required. The third-party provider’s app redirects the client to the bank’s authorization page, where the client logs in to their bank account & grants permission for the third-party provider to access their data.
Once the client consents, the bank shares the client’s data with the third-party provider utilizing an API. This API allows the secure & standardized retrieval of specific data, such as transaction history & account balance, from the client’s bank account.
Beyond data access, open banking APIs empower third-party providers to initiate transactions as well. For example, a third-party provider can use the API to directly initiate a payment from the client’s bank account without needing the client to log in to their online banking.
Open banking APIs incorporate robust security protocols to protect customer data. These safeguards encompass encryption, two-factor authentication, and access controls that restrict the data accessible to third-party providers, guaranteeing the security of sensitive information.
Open banking APIs create a secure and standardized conduit for third-party providers to access customer data and trigger transactions. This not only encourages heightened competition and innovation within the banking sector but also empowers customers by granting them improved control over their data and services.
Top 7 Open Banking Solutions
The financial services industry has undergone a swift evolution due to the influence of open banking. As we step into 2023, several open banking apps are positioned to have a substantial influence. Let’s explore a selection of notable open banking apps in various categories:
Plaid is an open banking digital platform presenting APIs that connect financial institutions & fintech companies. Plaid provides businesses with secure access to customer data from over 11,000 US financial institutions, enabling the development of innovative financial services and products. Plaid’s primary offerings include transaction data, account balances, and authentication. Prominent companies like Venmo, Coinbase, and Robinhood have harnessed Plaid’s services, ultimately leading to its acquisition by Visa for $5.3 billion in 2020.
Swedish-based open banking platform Tink connects financial institutions to over 3,400 banks across Europe. Tink’s APIs empower businesses to access account data, initiate payments, and verify customer identity. The platform provides account aggregation, payment initiation, and personal finance management tools, and it boasts partnerships with significant financial institutions such as PayPal and BNP Paribas. In 2021, Visa acquired Tink for $2.15 billion.
Yapily, a London-based open banking digital platform, presents businesses APIs to access banking data spanning the UK, Europe, & beyond. Through Yapily’s single API, businesses gain the ability to access bank account data, initiate payments, & verify account ownership. This efficient solution simplifies the procedure and facilitates smooth access to vital banking features for businesses of every size.
It caters to more than 2,000 European businesses and has secured funding exceeding $69 million.
Coconut is an open banking platform that changed a neobank into a banking hub, presenting more opts to clients. Catering to self-employed individuals, it offers a freelance accounting companion app that enables sole proprietors to efficiently handle income, expenses, and taxes by linking their bank accounts to the app. This simplifies accounting tasks, allowing them to concentrate on their work.
Basiq serves as an open banking API provider, granting businesses access to examine financial data sourced from different banks & institutions. With a track record of processing over 2 billion transactions and analyzing data from more than 100 financial institutions, Basiq’s services extend across Australia, New Zealand, and Southeast Asia. The platform provides a strong and dependable solution for companies looking for in-depth financial data insights to inform their operations and decision-making. Businesses harness Basiq’s APIs to deliver personalized financial guidance and real-time services, elevating the value and convenience of their customers.
Bud, a personal financial management application based in the UK, consolidates consumers’ financial accounts into a single platform, supplying personalized insights & tailored advice. This app offers users a convenient platform to centralize and oversee their financial data, enabling them to receive valuable guidance and assistance in making well-informed financial choices. It utilizes open banking APIs to establish secure connections with users’ accounts, delivering customized advice on cost-saving and expenditure optimization. Bud’s machine learning algorithms evaluate financial information, generating individualized product suggestions.
Launched in September 2007, Mint has gained over 15 million members. This widely used personal finance application consolidates users’ bank accounts, credit cards, and various financial accounts into a single platform. Mint offers an all-encompassing dashboard to assist users in maintaining a clear overview of their accounts, bills, and subscriptions. It facilitates budget management, expense tracking, the establishment of savings objectives, and the monitoring of credit scores.
Open banking applications are revolutionizing the financial terrain, granting users enhanced authority over their financial matters and delivering inventive services to elevate their financial oversight.
SDK for a crypto wallet based on Kotlin Multiplatform
Stfalcon.com undertook the project of crafting an SDK tailored for Android and iOS mobile platforms, to construct a cryptocurrency wallet using Kotlin Multiplatform. To attain the objective of sharing business logic and code harmoniously across diverse platforms, they harnessed the power of Kotlin Multiplatform technology. This strategy facilitated the utilization of identical business models, procedures, queries, internal data handling, and encryption on both Android and iOS platforms without any hindrance.
Through the utilization of Kotlin Multiplatform, they adeptly constructed an SDK that delivered a cohesive and streamlined development process for the cryptocurrency wallet application on various mobile platforms.
Interface design for Credit Agricole payment kiosks
Our team was tasked with creating the user interface for Credit Agricole payment kiosks. These kiosks’ main purpose is to minimize wait times at bank branches and simplify the tasks of the bank tellers. As a result, the kiosk design must prioritize user-friendliness, catering to even those with limited experience.
The emphasis lies on simplicity and straightforward usability to guarantee a smooth and trouble-free experience for every user, irrespective of their technological proficiency.
Open banking apps are no longer a futuristic concept; they are currently in use and continually progressing. As they expand their reach to encompass more banks and fintech companies, they encourage heightened competition and stimulate the creation of innovative products and services.
Choosing the right software development company to create your open banking application can be a challenging task. Before hiring a dedicated development team, it’s essential to assess their expertise & the techs they employ, as well as review successful cases in their portfolio.
At Stfalcon, we are fully prepared to help you with fintech software development & open banking adoption. Our team of experts can:
- Provide advisory support for implementing open banking and ensuring regulatory compliance.
- Design the user interface and user experience for your online payment solution.
- Choose the most suitable technology stack tailored to your unique needs.
- Aid in the development of your customized software payment solution or the integration of a payment gateway into your application.
Whether you have plans to develop your fintech application or platform, integrate open banking into your current services, or seek consultation, don’t hesitate to reach out to us.
Originally published at https://stfalcon.com.