Open banking is coming and may change fintech forever
By all indicators, the future of banking is wide open. The combination of mobile, open application programming interfaces (APIs) and the rise of machine learning are contributing to a growing phenomenon known as “Open Banking.” Open Banking is the concept of banks sharing their members’ data with independent third parties through APIs in order to allow them to execute transactions on their behalf or build new applications and technologies.
Open Banking essentially creates an ecosystem of data sharing which in theory could revolutionize the banking industry. While still a new concept, Open Banking has been embraced by many countries in Europe, with the European Union already supporting regulation through the Revised Payment Services Directive (PSD2) in January 2018.
According to The Financial Brand, “2018 will be a turning point for banking as the EU countries are obliged to incorporate PSD2 into national law and force banks to publish their Application Programming Interfaces (APIs). . . Consumers’ financial data will be released from the bank’s monopoly and will finally become the property of the customers who will have open access to it at will.”
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