Aeropay’s Post

A simple and clear view of the difference between Open Data, Open Finance and Ooen Banking. I see these terms confused frequently, so find this graphic quite useful.

The development of open banking amid today’s digital payment landscape Open banking refers to the ability of third-party service providers to gain secure and permissioned access to users’ account information. It allows users greater control over their banking data and enables third-party service providers to develop an array of new digital financial services. Both open banking and open finance can create an environment where traditional financial institutions are driven to improve their offerings and provide better, more innovative services to consumers and businesses. The resulting competition can lead to lower prices and increased accessibility and enable better choices for consumers. With access to more information, they can make more informed decisions, access a wider range of financial services, and benefit from new data-driven financial products and services. The concept of open data goes beyond open banking and open finance, encompassing data from other sectors, such as transit, social media, energy, telecommunications, health, and government records. The ultimate objective of open data is to provide consumers and firms with a holistic view of their data through a single platform. In some markets, open banking regulations developed in response to the emergence of market-driven innovations around payment initiation and account information services. In other markets, regulators sought to increase competition, innovation, and security in the financial sector, considering the growing demand for consumers to have greater control over their financial data. Concerns over data privacy and security amid rapid digitalization have also played an important role in the development of open banking regulations, as consumers have increasingly demanded greater agency over their financial data and the assurance that their data will be handled securely and transparently when shared. Previously, data was obtained exclusively through methods such as screen scraping and reverse engineering, but industry standards and regulations now encourage or mandate the use of secure APIs for data sharing. Some markets—including the European Union through the revised Payment Services Directive (PSD2) and Australia through the Consumer Data Right legislation—have mandated that banks share data and that third-party providers register with regulatory authorities. Other markets do not have mandates, but regulators have provided the industry with recommendations and guidelines, including open API standards. For example, the Canadian government has issued guidelines for financial institutions on open banking, including recommendations for data security and privacy and guidance on API development. 👉 Subscribe for more insights https://lnkd.in/d94JgWBU Source World Bank Group #fintech #payments #banking Leda Florian Alex Ali

In 2023, open banking reached a new milestone with $57 billion in transactions; however, financial experts claim that it is just the beginning. Open banking has evolved into an innovative technology that provides third-party financial service providers with access to consumer banking, transaction, and other data from banks through APIs. This evolution has resulted in widespread Account-to-Account (A2A) transfers, enhanced Real-Time Payment (RTP) processes in the EU, adoption of FedNow in the USA, and various other Open Banking applications. One of the most prominent advantages of these applications is their ability to facilitate safe, secure, and direct money transfers without the need for middlemen or intermediaries. According to PwC, Open Banking transactions save approximately 2-3% per transaction compared to traditional methods, representing a substantial cost-saving, particularly when considered at scale. While 2023 saw the continued and steady advancement in open banking, 2024 will witness its full-blown global potential. It is now safe to say that Open Banking is no longer a buzzword but rather a powerful force in the financial sector. At the heart of this technological revolution is the quintessential role of APIs, which has become a driving force behind numerous payment-related services globally. APIs serve as the secure gateways for seamless connections between financial service providers and consumer data. They facilitate data exchange, empowering developers to build applications that leverage banking, transaction, and other data. The groundwork is being laid for the Open Banking surge by various institutions. For instance, regulatory initiatives like PSD2 in Europe mandate open APIs for banks. Open Banking, fueled by APIs, is poised to transcend its current scope and impact populations worldwide. Organizations and developers keen on maximizing the benefits of the Open Banking boom must look to APIs as the crucial driver of this transformative technology. The integration of APIs is not merely a technical detail; it is the key to unlocking the full potential of Open Banking, revolutionizing how businesses and consumers interact with financial services globally. #API #openbanking #developers #bankingAPI #2024bankingtrends 

A pretty good graphical summary (courtesy of the World Bank) of the relationship and mapping of data types in the continuing evolution of the conversations from #openbanking to #openfinance to #opendata Canada's conversation, currently focused on delivering Consumer-Driven Banking, must also open up the horizon towards the same future for consumer data

https://lnkd.in/djbtgYH9 "Banks are major data collectors. U.S. banks have 1 exabyte of stored data, or one billion gigabytes. This is typically gathered from things like credit card usage, transaction records, customer bank visits, call logs, support chats, and web interactions. With open banking, retailers can use this financial transaction data to target advertising, give customers individualized offers, and tailor their initiatives in ways that are cost-effective and more attractive to consumers. Ready or not? Three-quarters of banks say they aren’t ready for open banking, according to recent data published by Sopra. The changes within the banking sector are spurring banks to develop their innovations and partner with data aggregators and potential competitors in the fintech sector to improve their offerings. The main way that banks will be able to share this data is through application programming interfaces (APIs), which allow third-parties to gain access to certain data and information. According to openbankingtracker, there are 182 banks and account providers that offer open banking in the U.S., with 36 bank APIs and 17 data aggregators. Among the banks that have created their own APIs is Capital One, which launched its DevExchange back in 2016."

Are we ready for Open Banking? "Open banking" lets consumers share financial data with third parties, enhancing services and competition. It allows for easier comparisons of bank offerings, seamless transfers, and comprehensive financial overviews. Despite the benefits, 75% of U.S. banks aren't ready for the change. The CFPB's new rule mandates data sharing, ensuring privacy and security. European regulations, such as PSD2, have already advanced open banking, promoting innovation by requiring banks to share customer data with consent. Both regions aim to leverage open banking for improved customer experiences and financial inclusivity. https://lnkd.in/ekJbFQsy

Open banking allows developers of mobile and web applications to securely access your current account data with your permission, making it easier to manage multiple financial products. The initiative aims to encourage innovation and improve competition in the banking industry. However, it's important to be cautious and ensure that any third-party provider you use is authorized and regulated. Furthermore, the future of open banking remains uncertain, as tech giants like Google and Facebook have the potential to transform the industry using banking customer data. Therefore, it's essential to stay informed and make informed decisions when it comes to sharing your banking data. Are you willing to embrace open banking and trust third-party providers with your financial information?

The future of open banking is bright, with the potential to revolutionize the financial services landscape. As more countries adopt open banking frameworks, we can expect increased collaboration between banks, fintechs, and third-party providers, leading to even more innovation and competition. For financial institutions, embracing open banking offers an opportunity to reimagine their role in the ecosystem. By partnering with fintechs and leveraging open APIs, traditional banks can enhance their product offerings, improve customer satisfaction, and remain competitive in an increasingly digital world. Open banking is not just a regulatory requirement; it is a transformative force reshaping the future of financial services. By enabling greater transparency, fostering innovation, and enhancing customer experiences, open banking is driving a new era of financial inclusion and empowerment. As this trend continues to gain momentum, financial institutions and fintechs alike must embrace the opportunities presented by open banking, while navigating the challenges and ensuring the security and privacy of customer data. For businesses and consumers, the future of financial services looks more connected, personalized, and innovative than ever before. Read More: https://lnkd.in/gS7NHzMx #opebanking #finance #innovation #smallbusiness #technology

I've been asked several times why we need an #openbanking rule. Here's my most basic answer, in an op-ed published by Payments Dive: The market-led approach to open banking in the US has led to a vibrant wave of innovation driven by sharing of consumer-permissioned data. However, access remains inconsistent, and consumers are potentially exposed in the event data is breached. More reliable access and enhanced consumer protection will strengthen "open banking" as a foundation for innovation in the US. As I write: "Realizing open banking’s enormous potential will require thoughtful, well-informed policymaking that keeps up with technological change, fosters innovation, and protects and enhances consumer financial services." https://lnkd.in/gNGFFqnX

𝐖𝐡𝐚𝐭 𝐈𝐬 𝐓𝐡𝐞 𝐒𝐭𝐚𝐭𝐞 𝐨𝐟 𝐎𝐩𝐞𝐧 𝐁𝐚𝐧𝐤𝐢𝐧𝐠 𝐀𝐏𝐈𝐬? Open banking is changing the way we handle our finances. It allows third-party developers to create new and innovative financial experiences by accessing your personal banking data. This means that things like applying for loans or tracking expenses can become much easier and more automated. One of the key components of open banking is the use of 𝐀𝐏𝐈𝐬, 𝐨𝐫 𝐚𝐩𝐩𝐥𝐢𝐜𝐚𝐭𝐢𝐨𝐧 𝐩𝐫𝐨𝐠𝐫𝐚𝐦𝐦𝐢𝐧𝐠 𝐢𝐧𝐭𝐞𝐫𝐟𝐚𝐜𝐞𝐬. APIs are like a set of rules that allow different software programs to communicate with each other. In the context of open banking, APIs are used to standardize communication between banks and third-party developers. The movement towards open banking was kicked off by a piece of EU legislation called the 𝐏𝐚𝐲𝐦𝐞𝐧𝐭 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬 𝐃𝐢𝐫𝐞𝐜𝐭𝐢𝐯𝐞 (𝐏𝐒𝐃2), which requires banks to open up their data to third-party providers. This has led to the emergence of open banking regulations and standards in countries around the world, such as the UK Open Banking and the Berlin Group openFinance API Framework. In the market, we are starting to see many examples of open banking in action. Banks like Nordea and Commerzbank in Europe, as well as Wells Fargo and HSBC in the US, are providing APIs for developers to access account data, transactions, and other banking services. This has led to the creation of many useful financial apps and services, such as budgeting apps, investment tools, and payment services. As open banking continues to grow, there are many opportunities for banks to stand out in the marketplace. By going beyond minimal open banking requirements and investing in things like security, developer experience, and service reliability, banks can remain competitive in the market. Looking to the future, we can expect to see even more growth in open banking, especially in new global markets like Asia-Pacific and North America. This could mean further digital modernization, new regulations, and the adoption of open banking in regions where it is not yet available, such as Canada.