The financial sector has been evolving rapidly, and open banking is one of the biggest shifts reshaping the industry. At its core, opening banking gives customers more control over their financial data and encourages collaboration between traditional banks and fintech companies.
Instead of keeping all financial data locked away, banks now share data securely through APIs, allowing third-party providers to create innovative tools and services. This shift is changing how people save, spend, and invest money. It’s also changing expectations.
Here are some ways fintech is shaking things up in the financial world.
More Power to the Customer
Traditionally, banks held all of the power when it came to financial data, its collection, and its storage. Customers had limited access to their data, and so, switching services was a hassle.
With open banking, you can now share your financial information with new providers much faster and easily. In fact, it can help you get better deals or more personalized services.
For instance, budgeting apps can analyze your spending habits across different bank accounts and recommend smarter ways to save. This level of transparency also forces financial institutions to compete harder for customer loyalty.
Access to Financial Literacy
Fintech companies are slowly but surely leading the industry, showing what’s possible when data is unlocked, accessible, and used creatively. As more people explore new ways to save and invest, tools like budgeting apps, robo-advisors, and calculators make financial literacy less intimidating.
For example, you can try this easy term deposit calculator tool to see firsthand how fintech simplifies decisions that once required multiple bank visits. You no longer have to spend time and money just to decide whether to open a savings account and where to do so.
Smarter Financial Products
Fintech has elevated the game through personalization. With access to customer data, fintech firms can build products that feel tailor-made. For example, a lender might offer a custom loan package based on your actual cash flow rather than just your credit score.
Similarly, investment platforms can adjust recommendations depending on your risk tolerance, lifestyle, and goals. This kind of fine-tuned financial advice wasn’t as accessible before open banking emerged in the market.
Faster, More Secure Payments
Open banking also makes payments smoother. Instead of having to enter card details or dealing with multiple authorizations, payments can be made directly from online bank accounts through secure APIs, offering the same level of safety, if not more.
This process reduces transaction costs, lowers fraud risk, and speeds up settlement times. Businesses, in particular, benefit from faster cash flows, while customers enjoy the convenience it brings.
The Rise of Embedded Finance
One of the most exciting developments brought on by open banking is embedded finance. It’s when financial services are integrated directly into non-financial platforms. Think of ride-sharing apps that let you pay instantly through your bank, or e-commerce sites offering built-in installment plans.
You don’t need to visit a bank branch or even a separate banking app. The financial product lives where you already are.
