With advanced Fintech companies on the rise, big banks are quickly losing steam. Retaining customers is difficult for banks when other financial companies are offering exceedingly more advanced and efficient banking services.
This efficiency can be achieved primarily through open banking. Open banking is a system that allows customer data to be shared via open APIs (Application Programming Interface). This paves the way for banking services that can be customized and effortless.
This revolution has already begun in the finance industry and open APIs play a major role. Fintech companies, specifically e-money institutions (EMI), are incorporating technology from outside companies via open APIs.
These new EMI startups are causing Europe’s Fintech industry to grow while simultaneously taking a bite out of big banks. These new e-money institutions have seen increasing growth thanks to open API’s, lower fees, swift on-boarding process, service variety, and personalized services.
E- Money institutions can take advantage of new products and services by adding them to their operations via open APIs. They can integrate technology from another company easily without the need to develop it themselves.
The main reasons it’s more advantageous for EMI’s to integrate outside technology as opposed to developing it in-house:
For most Fintech startups, it is more cost effective and efficient to implement systems from larger Fintech firms. For new companies, building an in-house system can drain resources significantly.
Take this example to see how e-money institutions can take advantage of ready-made financial technology:
An e-money company wants to provide their users with direct access to their debit cards. Without using existing technology from an established Fintech company, the process to approve such a service can take months. They would be required to apply to become a card issuer, develop a system and API, and implement it to their banking system.
Alternatively, EMIs can simply sign an agreement with a company that has already developed the technology and mechanism, and implement their API into the banking system. Through this method Fintech companies can provide and offer the latest, most advanced,and efficient services to their customers.
What technologies and services can banking customers expect to have access to in the near future?
There are always new algorithms being developed to alter the way we interact with machines. Speech recognition is one of the upcoming technologies that will change banking practices. Customers will be able to log in, conduct transactions, and execute international money transfers by ‘speaking’ to their bank account. Not only does this give a user an upgraded banking experience but it is also extremely useful for customers with disabilities.
Artificial Intelligence (AI) is being integrated into the finance industry and one way it will manifest itself is in the digital bot. These AI bots can analyze customer information to offer personalized banking assistance based on real data. The digital bot can reduce the stress often caused by making tedious financial decisions.
As a customer sees the value that their digital advisor generated, they will trust its decision making and interact more frequently. This increasing interaction will help the digital advisor learn even more and become even more efficient at its job.
Technology is completely changing the way we do our banking and many exciting features can soon be available. Soon it will be the norm to consult with your digital bank advisor by speaking into your mobile or tablet device. You will be able to also complete all of your banking needs in this manner, be it checking your balance, transferring funds, paying bills, and much more.
Michael Dewan is head of PR at GBO International Financial Services LTD