Your bank account holds your money, and you probably use your checking account for most of your transactions and payment. But the increase in technological advances creates options to maximize the value you get from your respective banks. With open banking, third parties can assist you to save money, time, borrow easily and pay painlessly.
What is Open Banking?
Open banking is the method of sharing financial information electronically, securely and only under certain conditions that the customers approve of. Basically, Application Programming Interface (APIs) allows third parties to access customers’ financial information with ease, which promotes the development of new apps and services. Open banking is the technology of allowing access and control of consumers’ banking and financial accounts through third-party applications. Banks allow access and control of consumers’ personal and financial data to third-party service providers, that are typically tech startups and online financial service vendors. Customers are required to grant consent to let the bank allow such access, like checking a box on a terms-of-service screen in an online app. Third-party open banking APIs can then use the customer’s shared data
Open Banking Process Flow:
Business Scenario: In today’s fast-paced world time is a key aspect of a business. Also, in this competitive world & cutting-edge technology one should understand how to leverage the full potential of technology. And provide business solution services on time with ease with the best quality.
Time plays an important aspect when it comes to NBFC Institution. In short, loan processing should be quick and hassle-free without compromising on the required paperwork to be done.
One of the most crucial parts of this process is bank statement verification, detailed analysis of statements and lastly, the creditworthiness of customers for an applied loan. It surely is a cumbersome process but an important aspect of loan processing.
Also, several times for loan processing, the customer needs to provide bank statements from various banks where he holds the account. So that loan providing institutions should be sure enough for all the checks.
Currently, this documentation takes a lot of time as it is entirely dependent on the customer or an agent who works on behalf of the customer that ultimately wastes a lot of valuable time of loan processing thus lengthening the process furthermore
Solution: To tackle this process of the extensive bank statement verification or its analysis. Open banking technology could be utilized. You ask how? Well, open baking is a technology which could be used where NBFC’s sends an API call to banking systems that are utilizing this open banking technology. NBFCs are using various CRM platforms for their loan processing e.g. No 1 CRM Platform of Salesforce.
So, an email is sent from the Salesforce platform to the intended prospect that has a consent form with the required link enabled for authorization purposes. This process feeds in the information of the customer from the bank to the open banking system that is ultimately opted by the NBFC institution.
Once the customer gives the consent by clicking on the link that opens the open banking page, he /she chooses the bank he has accounts in and then clicks on submit or approve. Soon after that, all required details of the customers’ bank will be extracted, and the required response will be sent back to Salesforce – which could be a PDF file of the bank statement or the response could be stored in the VF page – however the customer want.
This way it saves a lot of time and gives a quick turnaround time on loan processing, where the NBFCs’ can take a quick decision of loan application.
The above use case is just one aspect of open banking. Open banking could be leveraged for a lot of other banking processes. It is already a process in itself.
Some of the Open Banking API providers are IWOKA, Yapily, Pelican Payments, etc.
Banks that use Open Banking: HSBC, Barclays, Lloyds, Nationwide, Royal Bank of Scotland.
Open Banking API:
Note: Banks must accept or follow or be compliant with PSD2(Payment Service Directive) especially for EU banks. Checklist includes. API Function, API authentication, API documentation.