NOVEMBER - 20208MY OPINIONINTHE FUTURE OF BANKING IS OPENOpen Banking made its debuta relatively short while agoand has rapidly evolved into a mainstream function, gaining enough momentum to warrant being a key component of many financial institutions' strategy and execution plans. Open Banking can be defined as a collaborative model that allows sharing of financial transaction data with authorized third parties via application programming interfaces (API's)upon customer consent.The benefits of Open Banking are extensive and include improved experience for customers and potential new revenue streams for financial institutions delivered as a result of new and enhanced products, services or capabilities for existing and untapped markets.At this stage, financial institutions are primarily leveraging Open Banking in two ways:· Developing APIs to share data with authorized aggregators and fin-techs via customer consent as opposed to allowing aggregators to broadly screen scrape. This helps protect customer data and minimizes fraud as customer credentials are no longer stored with the aggregator and data cannot be shared without customer consent. Customers also have the ability to revoke consent at any point in time.· Developing Personal Financial Management (PFM) solutions or providing financial views that aggregate spending across multiple banks and payment platforms to provide customers with a holistic picture of their finances.In addition to these applications,there is enormous potential to serve customers in whole new ways through the creation of unique API-enabled products and services in partnership with third party providers as opposed to the product-centric approach that exists today. By Mallika Daswani, Vice-President Digital Channels, TD Bank, USA
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