Open Banking is one of the latest trends in payments, e-commerce, and banking software development. Its popularity and growth are due to the search for an alternative to traditional card payments.
Among the main advantages of Open Banking are:
Expenses reduction
Decreased fraud
Improved consumer experience
With the aging of the card networks' infrastructure and new challenges and tasks in e-commerce, there is an increase in demand for Open Banking platform providers.
What is Open Banking?
Open Banking is a payment solution that provides access to third-party payment services and other financial service providers to banking transactions and data. With the use of APIs and the involvement of third parties in transactions, we can greatly expand the quality and quantity of financial products and services available, which is a core benefit for both merchants and consumers.
According to the Allied Market Research report, the Open Banking market was valued at $13.9 billion in 2020, and by 2031 it is projected to grow to $123.7 billion, which indicates the growing demand for Open Banking software development.
Reasons Behind The Market's Growth
Among the main reasons for the growth of the Open Banking market, two factors are most often highlighted:
Electronic payments' growing popularity leads to reducing the share of cash deals.
Increasing the share of e-commerce sales in retail purchases.
The percentage of online sales in the UK has grown from 2.8% in 2006 to 18.9% in 2020. And the share of e-commerce purchases continues to grow steadily, which is why merchants are looking for new solutions which can meet current needs, as well as provide infrastructure for future sales, and Open Banking software is such a solution.
Benefits Of Open Banking
Let's take a look at some of the core benefits of Open Banking that both merchants and consumers can enjoy.
Advantages For Consumers
Among the main benefits you as a buyer can get from Open Banking implementation is the ability to access a wider range of products and services, save money on fees, as well as reduce the risk of fraud and get better control over your data.
Enhanced Control Over Data
With Open Banking, consumers have full control over their financial data. By using APIs and Open Banking infrastructure, you can provide access to your banking data to third parties, as well as determine the level of their access.
Improved Management
Open banking means that you can combine several bank accounts in one application. It makes processes of purchases and subscriptions much more convenient and efficient.
In addition, as you can provide permission for third parties to use your data, you can receive personalized recommendations on the best financial products and practices for you. All these make managing your accounts smarter, as well as gives you advice on how to save money, where to put your savings to maximize profits, and much more.
Personalization
One of the main advantages of Open Banking is personalization. One-size-fits-all financial solutions are not always the best option because different people may have different needs.
With Open Banking, companies can better understand their customers and their needs, so consumers can get the products and services best suited for them. With a wider range of products available and personalized recommendations, Open Banking is great for E-commerce.
Fast And Secure Payments
Open banking payments are similar to instant bank transfers. With real-time transaction processing and high-security standards, consumers can make purchases without the long wait for approval and confirmation, as well as avoid the risk of fraud, making OB a perfect solution.
Advantages For Merchants
The implementation of Open Banking solutions provides merchants with significant benefits over the traditional system. Among the main advantages is the ability to automate and streamline financial processes, increase revenue, and reduce the risk of fraud, as well as such an approach allows businesses to analyze and offer consumers more personalized products.
Improved Efficiency And Automation
One of the main features of Open Banking is the ability to provide access to different financial data to third-party service providers. With such an approach, small and medium businesses can focus on more essential tasks. In addition, integrated Open Banking systems also help to automate some of the processes, which is a cost-effective strategy in the long run.
Fast Payments
With the implementation of Open Banking solutions, payments are made quickly, smoothly, and safely. This is possible because in such a case, transactions go directly from bank to bank, bypassing intermediaries.
Lower Fees And Reduced Costs
The use of payment APIs eliminates transaction fees and also reduces transaction costs. Thus, with an Open Banking infrastructure, merchants can reduce their service fees and save costs accordingly.
Better Customer Experience
It is one of the main advantages of Open Banking and both merchants and buyers benefit here. Since the Open Banking system provides biometric payment protection instead of data entry, the security of transactions is increased.
Moreover, such solutions are a more convenient alternative to traditional payments. Fast and secure transactions greatly improve the purchasing experience.
A combination of more personalized product and service recommendations and the ability to use multiple bank accounts in one app makes Open Banking the perfect option for online shopping and subscriptions. And the better the quality of your services is, the higher the conversion rates will be.
Open Banking Software Development
The Open Banking market continues to grow rapidly in recent years. Among the main reasons are the growing popularity of online shopping and the widespread shift to the use of electronic payments instead of cash.
Improved transaction infrastructure that is faster and more secure in Open Banking, as well as a wider range of products and services available, make Open Banking one of the most promising trends.
The development and implementation processes of such solutions allow businesses to reduce costs, increase the quality of services and improve the customer experience. Open Banking is a convenient and smart infrastructure that does not require expensive investments for its integration. Learn more about Open Banking and its implementation with a full-cycle software development company.
