Transforming the business models to become digital ecosystems can bring a New world of opportunities with Open Banking. For financial services firms, open banking provides an opportunity to demonstrate digital leadership, and with the changes we have seen in business models generally moving to a more digital offering, clients are looking for real-time, instant and faster payment capabilities.
As a result of this pressure from clients, very innovative solutions using open banking and Payment Initiation Service Provider (PISP) services are beginning to emerge and provide clients with alternative payment channels for giving instant access to the funds and is playing an important role in overall working capital management. To make Open Banking successful and sustainable, however, more banks need to embrace an end-to-end digital architecture.
Innovation is imperative for today’s banks. They face intense cost pressures, fierce competition and soaring customer expectations. SMEs are choosing alternate services than banks to secure their loans. Bank lending is the most common source of external finance for many SMEs and entrepreneurs, which are often heavily reliant on traditional debt to fulfil their start-up, cash flow and investment needs.
While it is commonly used by small businesses, however, traditional bank finance poses challenges to SMEs, in particular to newer, innovative and fast growing companies, with a higher risk-return profile. “Open Banking”, where consumers allow third-party providers to use the financial information held by their bank to inform new products, is growing and this will create big opportunities to make banking better, in particular, tailored, personalized solutions for every area of money management.
