What makes open banking a revolutionary change in the banking sector? An answer to this question lies in the total digitalization of the industry. Banking has remained a closed sector from time immemorial for exerting a monopoly on the majority of financial services. Today, the thriving fintech domain gives customers the right to choose an alternative. Thanks to the revised Payment Service Directive (PSD2) in Europe, all banks have to switch to the Open Banking model.
Let’s understand why open banking is considered a revolution in the fintech sector and how a customized fintech app solution can leverage this concept. But, before moving forward, let’s go through the circumstances that lead to the wide adoption of open banking.
It all started in the year 2018 when the EU countries got ready to incorporate the revised PSD2 into national law and force all banks to publish their APIs (Application Programming Interfaces). Simply put, it is the PSD2 directive that drives the future of open banking in the EU. It will open market barriers for European and other banks while changing the rules of the game completely.
Quick Facts
- 94% of FinTech enterprises consider that open banking can enhance current services
- 84% of financial service providers are investing in open banking products
- 77% of EU banks plan to invest in open banking for their commercial customers
- 77% of financial institutions agree that open banking will bring radical changes
It is fair to mention that the COVID-19 pandemic has boosted open banking and soon customers will get more customized and innovative products and services using the open banking concept.
Original Source: How Open Banking Brings Revolution in FinTech Sector?
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