Technology is continuously advancing in every walk of life. While advances in entertainment and phone tech are impressive, the fintech developments are one of the best developments this century. Open banking is efficient, easy, and more secure than alternative finance methods.
Did you know that 58% of Australians use digital banking as the primary way to manage their money? And the number continues to grow. So, what is so good about open banking? That said, here is everything you need to know about account verification and open banking.
What is open banking?
Open banking allows third parties to develop apps and online solutions that use your data obtained from financial institutions.
For example, financial planning apps assess your regular income, cash deposits, withdrawals, and spending habits to offer insights and advice. Before the rise of fintech, customers had to pay a financial advisor or accountant for such personalised advice.
Now, users can download an app, log into their bank account, and receive valuable insights for a nominal fee. Open banking has enabled the financial sector to scale immensely.
However, it’s not just for banking apps — lending, collections, debt recovery, investment, and crypto third parties also use open banking.
What does account verification have to do with open banking?
People fear the power a third party has over their finances. And vice versa, companies fear the risk and fraud of trusting anyone to share their financial data. Open banking has yet to take hold of Australia.
However, account verification has stepped up its game. In the past, Australians had to physically prove their identity via bank statements or use the micro deposit method. Yet, with Basiq’s fast, efficient, and secure account verification process, customers can connect their open banking within minutes.
What are the benefits of account verification and open banking?
Europe currently leads the world, with 12.2 million open banking users, expected to rise to 63.8 million by 2024. Why should Australia jump on the bandwagon?
1. Tailored products
Open banking allows companies to offer tailored solutions and products to consumers. With all the customer’s data pooled into one place, third parties have the potential to create dedicated user experiences.
People can manage three accounts and investments all from the same place. Say you signed up for an investment app. You connect your three different bank accounts to the app, which analyses your spending habits.
The app can ascertain how much each customer can pool aside each month to invest — rather than offering blanket advice to all users.
2. Security and transparency
Despite years of success, many still doubt online banking and digital financial products. There is something suspect about trusting your money with an intangible service to many.
Accordingly, open banking places control in the customer’s hands. With highly-secure verification processes, customers can choose who has access to their data, how they use it, and when.
3. More efficient
The main advantage is the efficiency it offers. With all your financial data in one place, you can save time switching between accounts and remembering passwords. Verification could take mere minutes rather than days.
Furthermore, loan approvals are faster. By allowing third-party credit services to access your banking data, they can quickly approve loans or credit. You don’t need to spend days wondering when the loan approval will come through — get your money as and when you need it.
Plus, credit companies can tailor their products for each customer. With more significant insights into your spending habits, they can offer a credit product that suits your lifestyle and finances.
4. Control over personal finances
One of the benefits of open banking is access to tailored financial advice. Over 800 fintech companies in Australia are helping Aussies take control of their finances. While most fintech focuses on digital payments and lending, 4.3% of companies assist cryptocurrency exchanges and 1.2% help users manage their digital identity.
With such an array of different third parties offering their services, Australians are in a better position to budget, borrow, and invest money.
Open banking is still in its infancy, yet we’ve seen colossal progress over the past few years. With improved account verification security, there is no reason you shouldn’t take advantage of all that open banking has to offer.