Month: June 2023

The financial industry is evolving at a rapid pace, all thanks to technological advancements and increasing customer demands. If we were to discuss about one such innovation that has swept through the financial institutions and banking sectors, it would be the emergence of open banking and the development of APIs. Recent studies have revealed that the open banking market is anticipated to reach almost 159 billion US dollars by the year 2032, and currently open banking has a market share of nearly 45 per cent, which is a huge number altogether.

Now what exactly are Open APIs? APIs are basically a set of tools through which data is shared between different platforms. In open banking, APIs let third-party applications to retrieve financial data pertaining to the customers, thereby enabling them to create banking and financial services and products that cater to the needs and preferences of the customers.

The whole concept of open banking, that’s making a dynamic revolution in the finance industry, is purely based on the regulations such as The Payment Services Directive (P2D2), Competition and Markets Authority (CMA), and in select countries, the central banks regulates it. Together, the Open banking system as well as APIs have become the pillar of the financial industry and are equipped to uplift the fintech sector.

Benefits of Open APIs and Open Banking :

• Rise in competition:

Open banking generates more competition in the financial industry as it allows third party suppliers to offer new and inventive financial products and services. This increased competition offers great advantage to the customers by giving them access to multiple options in the financial market, as well as the banks by motivating them to improve the services that they offer.

• Better Customer experience:

The main purpose of open banking is to improve customer experience by letting banks provide products and services that are more tailored and seamlessly easy to use. For instance, third party apps create apps that allow consumers to access their necessary financial statistics and make payments without having to go through the hassle of switching between apps.

• Compliance with regulatory framework:

Open banking is regulated by various government authorities, namely Competition and Markets Authority (CMA) in the united kingdom, Revised Payment Services Directive (PSD2) in European Union, and in certain countries it’s regulated by their respective financial regulatory bodies or central banks. This ensures that financial institutions and banking systems comply with data privacy, security regulations and protection of customer information.

• Stringent data security system:

Another great advantage of Open banking is data security. By providing third-party providers with a strong regulatory framework and controlled way of accessing customer data, there’s increased data security and elimination of any kind of data breach. This further improves customer loyalty and trust in the field of finance.

• New source of revenue:

Open banking widens the opportunity for financial institutions and banking systems to have multiple revenue streams by enabling them to offer financial products and services or by sharing customer data with third-party developers, allowing for monetization.

Challenges of Open Banking and Open APIs:

As open banking and banking APIs are directly dealing with the personal data of customers, there is a possibility of challenges to occur in relation to regulatory compliance, data privacy, etc. Banks and third-party providers should carefully manage the sensitive data and keep in mind the regulatory requirements.

While open banking still faces challenges, the perks and benefits of open banking and bank APIs clearly overpower the challenges. As these technologies are largely adopted and used, more and more innovative products and services can be created to meet the rising expectations of the consumers.

 Conclusion:

To summarize, open banking and API integration play crucial roles in transforming and modernizing the finance sector. By linking both banks and third party providers, customers can have great command over their finances and access numerous advanced banking and financial services which would otherwise would not have been possible.

Thus, The future of these tech-driven services holds significant potential. We are sure to see a drastic shift in the way customers interact with numerous banking and financial services.

If the above blog intrigued you to learn more about the latest tech trends and its implementation in the BFSI Sector, make sure to attend the upcoming event curated for industry experts who are on the lookout to seek tech-driven solutions from notable speakers.

To Know more about the event: https: //bfsiitsummit.com/

In today’s digital era, The financial services industry is growing and transforming exponentially and this change is fueled by incorporating advanced technologies like Machine learning and AI in financial services. Across various sectors of financial services, about 75% of them incorporate the usage of at least one significant AI use case to accelerate their outcome. AI-enabled applications are empowering insurers, fin-techs, banking institutions to deliver top-notch services as well as increasing their market share.

In this blog, we will dive into the contributions offered by AI and Machine learning in the wide landscape of finance and analyze the capabilities as well as the benefits that they bring forth. Keep reading if you are keen on exploring the impact of AI in the financial sector and reap lucrative fruits from the knowledge you consume in the following points.

1. Better and improved Financial Surveillance:

Financial monitoring or financial services are vital for every organization to prevent fraudulent activities from occurring. By leveraging AI and Machine Learning algorithms, financial data can be systematically collected and examined, preventing money laundering activities by detecting frauds.

This enables financial institutions to ensure adherence to rules and regulations and thrive in their respective sectors.

2. Provides Top-notch Financial Advisory service:

Many people are indulging in passive investment today, and this very interest of people has made fin-tech companies invest in AI solutions. What sets Robo-advisory apart is its ability to provide useful suggestions and tips based on the preferences of the investors. AI automates the entire investment process, so the only thing the investors have to be concerned about is depositing money into the account.

This is a major advantage for those who are not proficient in handling investment activities on their own. So if you’re someone who wishes to excel in passive investment without having the thorough knowledge of financial analysis, then this AI use case is here to make your investment process seamless and easy.

3. Enables Risk Management:

By using machine learning and AI in financial services, the risk levels involved can be minimized by examining extensive data sets from multiple sources. Machine learning tools can get access to data sources during assessment of loan applicants and their creditworthiness.

As a result, Companies can get insights to make relevant adjustments in the loan terms by predicting the customers who are at a higher risk of loan default.

4. Compliance with Rules and Regulations:

The biggest obligation of a financial institution is to follow the rules and regulations that govern the financial processes. If a bank specialist omits a detail in the reports, it may result in minor issues or even cause severe consequences. But with AI’s intervention, data sets are accurately examined by taking into account the different rules and regulations.  

5. Drives Process Automation:

Automation in financial activities is proved to reduce tedious tasks which are usually done manually by employees in financial sectors. Tasks that involve document preparation and examination of client information can be accomplished in a matter of seconds with the help of AI automation.

Conclusion:

In conclusion, Machine learning and AI-enabled applications have had far-reaching positive impact on the financial service sectors. By exploiting the power of data and algorithms, AI and machine learning assist in improving risk management, fraud detection, compliance of rules and regulations, etc.

Additionally, using AI in business leads to the development of smart and inventive products and services like robo-advisors which modify the way people interact with financial markets. However, It’s imperative to use these AI tools responsibly without tampering with the extracted data. Continued research can play a key role in increasing the advantages of these tools, making sure they’re sustainably and responsibly used.

The upcoming 19th edition of BFSI IT Summit India can provide you with detailed insights on the latest digital trends to be integrated in your finance operations. Don’t miss out on the chance to get enlightened by industry experts on how to digitize your financial space.