Published on: April 12, 2022
Financial institutions understand the importance of implementing digital technologies to meet the newest customer's expectations and demands. However, the pace at which banks are digitally transforming is not fast enough.
The adoption of digital services lags. This is not due to a lack of appetite or vision from the industry, but due to the many challenges that financial institutions face when it comes to bridging legacy IT systems and new ones. Banks worldwide are coming up against multiple issues due to
Thus, to leverage innovative technologies while ensuring seamless customer experience, they must embrace 'Open Banking' – opening their architecture to digital technology specialists.
Open Banking refers to open APIs (Application programming interfaces) that enable individuals and businesses to share their banking data with third parties, build applications and provide a flexible 'digital core' on top of existing systems. The impact of Open Banking services goes beyond IT operations – it reshapes the future of the financial services market.
We see collaborations among banks, fintech companies, and other parties offering interconnections via banks' APIs. These joint efforts enable financial institutions to reduce operational costs and enhance their core functionalities in the short-to-medium term. At the same time, an open ecosystem helps them extend their range of services or develop a new sustainable business model for underserved markets.
The adoption of open banking in alternative SME financing - enables organizations to get a better overview of cash flows to determine credibility, improve risk assessments and drive operational efficiency in lending processes. An Open Banking infrastructure is also suitable for customer identification and product customization. This helps reduce decision-making time and assists in offering the best financing solutions.
Open Banking offers three key benefits to business lenders.
The adoption of Open Banking can support an effortless lending process, as it automates many manual procedures that a loan application requires. This means lenders can expand their target market and expand their business presence.
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For the financial industry, 'Open Banking' should be part of its digital vision to be future-proof. Only this approach will allow them to be equipped with the right capabilities to stay competitive, be innovative, and deliver a better customer experience.
Find out how our °neo lending engine can support the SME Lending process with a seamless user experience and easy product setup.
