Open banking “requires financial institutions to share customer data with third-party developers via APIs.” Open Banking’s main goals are to boost transparency, increase competition and partnerships and create improved service levels. A summary of open banking is well defined in the following statement:
“As banks embark into this brave new world, it’s critical that they understand going it alone will not deliver value for customers and may see them leaving altogether for a nimbler competitor. However, there are huge gains to be made for those bold enough to reimagine their business as a platform and embrace the change that lies ahead.”
Open banking’s API’s work best when they are designed to be discoverable ands reusable and are therefore available to more delivery chains. By securely opening APIs, banks will be “creating new revenue channels by sharing their core banking capabilities and customer base with authorized innovation partners.”
Some banks have even transformed their core services into a platform of APIs allowing users to, for example, access customer spending patterns through its APIs and offer customers targeted recommendations for products and activities based on their previous behavior.