Welcome to Episode 4 of Trend Talk!
Hello all, it’s Scott and on today’s episode, we’ll be talking about Open Banking and Crypto.
Trend Talk Episode 4: Open Banking & Crypto
Open banking has been brought up by many crypto and blockchain businesses and traditional finance. Open banking will supposedly transform business operations and payment transactions. However, open banking is still in the “wild west” as the full potential of its technology is being built, studied, and looked into.
So what is Open banking?
Open banking can be basically understood as a customer-led banking. This lets an individual share THEIR financial data with third-parties to open up a new gate to different opportunities through APIs (application programming interfaces) developed by banks.
As only the largest banks handle their customer’s financial data for privacy or security purposes, many people and businesses are limited in what they can do with the said data. Through open banking, individuals can use apps and give permissions for the apps to pay their bills automatically, authorize a platform to analyze their investments and provide financial advice that suits the individual.
Where does blockchain come in?
Open banking and blockchain technology share the same ideology in the sense of easy access, security, and “ownership”.
Crypto is used for speed, efficiency, and access at all times. Traditional banking or traditional finance takes quite a while and there are set operational hours for the average joe.
When people first join crypto, the transfer of assets is hard and confusing. Most exchanges only accept card payments or bank transfers you have to do manually. There are quite a lot of difficulties such as funds taking a while, price change, frauds, errors, fees, and more…
This is where open banking comes in. Open banking removes the security difficulties and aspects. Open banking will just verify the authentication process (let’s say biometrics). Open banking integrated with crypto exchanges or blockchain will change and reform the payment system all over the world.
More specifically, the UK has been implementing open banking in 2018 while the EU has introduced Payment Services Directive (PSD2) in 2019. The new regulations required banks to provide a wider access of their customer’s data (with consent) to verified and licensed third party providers. This created tons of new opportunities in financial areas and sectors.
Thank you for tuning in for this week’s Trend Talk! See you all next time!
***This is not financial advice~ these are opinions! DYOR (Do Your Own Research)!***
References:
Ripple’s Insight on Open Banking
ThePaypers Open Banking Report
How Ready Are Enterprises For Open Banking, Blockchain And Digital Currencies?
Open Banking and Crypto: An Unexpected Duo that Can Actually Work
