There are many uses for open banking. For example, open banking can better facilitate the process of switching from a checking account with one financial provider to another, or help a consumer more easily share their financial information with a mortgage lender.
Consider some of these common uses of open banking:
Open banking can help lenders get a more accurate picture of a consumer’s financial situation and risk level in order to offer more profitable loan terms. Furthermore, open banking helps increase the speed of loan application screening and approval.
Personal Finance Tools
Through the use of data sharing, personal finance tools are able to give customers a complete overview of their financial situation. For instance, personal finance apps that analyze spending habits and offer customer-specific product recommendations, all help to identify the best financial products and services for a user.
Sending and receiving money online or with an app is made more seamless with open banking because it allows for a frictionless customer experience when authorizing payments. In order to increase security in electronic payments, open banking verifies users’ identities and bank account numbers before authorizing a payment or withdrawal of funds.
Open banking makes the onboarding process for opening a new checking or savings account faster and easier. Open banking allows the flow of bank data so that a consumer’s information, such as address, occupation, income details, name, and date of birth, as well as credit history, are all available in one place. This ultimately makes the experience of opening a new account smoother for customers.