Open Banking: challenges and opportunities in the fight against the risks of unpaid invoices

We talk a lot about Open Banking. But how many know what it's really about? A term that scares some. An opportunity for others. The reason is an easier flow of data and an opening of this data to Fintech players. Sharing data means securing this data. And data management is a vast subject. Definition, advantages, benefits and challenges of Open Banking... Meelo gives you everything on the subject.

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What is Open Banking?

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“Open Banking is the opening up of bank data.”

In other words, it's about the sharing this data collected by banking institutions on their customers together with other companies, aggregators. The objective is to take advantage of this data that circulates to improve the customer experience.

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In terms of data, this can be data such as the geographical location of bank branches and ATMs, the banking services offered, but also customer data. At the origin of Open Banking: this European directive on payment services or PSD2. Objective? Open the banking ecosystem, strengthen the security of online payments and promote innovative financial services.

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The players in Open Banking

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At the heart of this concept are banks, which act as a real hub between various players, including aggregators and fintechs.

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What is Open Banking for?

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Open Banking was designed to improve financial services for customers. By opening access to data that has been historically stored internally, it allows new businesses and products to enter the market. While using this data in an innovative way.

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The aim of Open Banking is to:

- Help customers better transact, save, borrow, lend, and invest their money

- Reduce agios

- Improve customer service

- Increase control over financial data

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How is data governed in Open Banking?

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Focus on regulations and PSD2. Banks are required to allow customers to share account data and initiate payments from third-party platforms such as payment service providers (PSPs) or Fintechs.

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In Open Banking, you should know that a customer's banking data is neither the property of the bank nor that of Fintech, but of the customer himself. He can use them however he wants and share them with an authorized service provider to benefit from them.

What the regulations say about Open Banking

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Let's be clear, Open Banking is not dangerous as some might think. Indeed, banks set up infrastructures that allow their customers' data to be shared with third parties only when the customer chooses to do so.

Open Banking: a real growth opportunity for businesses

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This concept goes beyond simply digitizing banking and financial services. And sharing data requires more than simply ensuring data security and customer privacy.

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This is why opening bank data is a source of challenges. It is causing profound changes in the market for financial institutions and traditional services by creating new financial service providers.

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It stimulates innovation, radically transforms the vision of credit, and significantly reduces the time required to gather information. A significant advantage in protecting yourself from the risks of fraud and unpaid invoices, in particular for credit management.

Open Banking, a challenge for the banking and financial sector

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This concept is indeed a source of numerous benefits and it is a real revolution in the world of finance.

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Open Banking is about encouraging competition and innovation in the financial services industry in order to create better products and experiences for businesses and customers.

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Open Banking will solve a lot of problems such as:

- Mistrust in banks

- The use by customers of traditional banks of outdated products, services and functionalities

Better control the risks of non-payments with Open Banking

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The openness of bank data creates new opportunities for businesses in managing their credit risk. Indeed, Open Banking allows access to information more accurate and in real time, in particular on the solvency of customers, which facilitates risk assessment and, ultimately, decision-making for the granting of credit.

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