The Wonders of Open Finance and Why You Should Give Us Your Data
These are interesting times. The world of finance continues to evolve. And this evolution has thinned out the mainstream understanding of finance and financial technologies. As digitization continues to collide with human endeavours, our experiences continue in loyalty to its marriage with innovation.
One such innovation is the concept of Open Finance. Open finance represents a financial ecosystem where customer data transitions from being a tightly-held power tool to becoming publicly accessible and within reach, at the say-so of the customer (you).
Open Banking vs. Open Finance
Open Banking and Open Finance are like two peas in a pod, they however have significant differences and contexts for use.
Open banking is mainly concerned with how banks and other financial institutions share customer data with regulated third-party financial service providers (FSPs), through the use of application programming interfaces (APIs). Such data include transaction history, account statements, and other banking details. Open banking serves as a pillar for expanding the scope of finance by opening up the “gates” of the banking industry. And allowing other financial service providers, which include those fintech applications you use, to tap into their vast and rich fields of data to build more customer-focused products for users. Not only does this speed up innovation, but it also encourages a competitive marketplace in the finance sector.
While Open Banking and Open Finance are often used interchangeably, the latter encompasses a broader view and is built on the framework of the former. Open finance is an extension of Open Banking. It further democratizes financial services for customers by allowing them to pool data from an array of platforms while retaining their control over how their data is used or distributed. Rather than just relying on traditional banking services, Open Finance allows data to be collected from any platform where a user’s financial data is located. Open Finance welcomes the idea of being able to access and share a wide range of financial services, products and data across multiple FSPs. Authorized third-party providers can draw from financial data that do not even exist within banking institutions to nurture solutions that uniquely cater to individual customers. These include investment platforms, insurance services, crowdfunding platforms, lending marketplaces, and cryptocurrency solutions.
With Open Finance, even people who do not own bank accounts can share their data with, and access financial services from various platforms. This serves as one of the major drivers of financial inclusion, providing access through the interoperability between financial ecosystems.
Think of it like this: Open Banking and Open Finance are offsprings of the “Open Economy”. Open Banking, the elder, is laser-focused and rigid, basing its existence on just one sector — banking. Open Finance is the sibling that picks up the legacy of the elder and expands on it. It is flexible and accommodating, always willing to move with the tides of time.
Benefits of Open Finance
Accessibility and financial inclusion: Open Finance opens up the pathway to customer-focused solutions that traditional banking does not offer. People can get easy access to loans, digital accounts, wallets, and crowdfunding opportunities without turning to the banks or re-entering their financial information into any platform. Open Finance also provides an avenue to tackle business problems with personalized financial products and services. Businesses can easily access services like bookkeeping, credit and financing, invoice generation, and payment processing without going through tedious documentation processes.
Increased innovation and competition: By removing the monopoly from financial institutions, other players can enter the market and leverage their access to customer data to create more innovative products and services. Collaboration between traditional banks and fintech startups also continues to birth more enjoyable and secure experiences for users.
Improved personal finance: Readily available data and insights aid users in making informed financial decisions. With access to their full financial footprint, a person can track their earnings, expenses, savings, and investments without breaking a sweat.
Why should you give us your Data?
Hundreds of people would happily spend millions to have what you have now. You might not consider yourself lucky, but a large chunk of the baby boomers and Gen X population would. Only if they had, at your age, a single app that could sync all their “money pots” in one place, track their earnings and expenses, categorize their spending, manage their savings and simplify their payments.
Everything you need to monitor and manage your money in one app. On a platter!
And we built Trakka to help you do just that.
We’re passionate about simplifying money management for millennials. We will go to far lengths to provide not only the foundation but also the structure to help you manage your finances easily and efficiently.
It’s an Open world, and everything you need to control and manage your finances is right here. Gone are the days when personal finance was for the “gooroos”. If you haven’t, now is the time to start your personal finance journey.
Start with us here.
