With change proliferating more rapidly than ever, predictions of what’s to come are aplenty.
At Cloud Elements, we feel the most effective way to look forward is by first looking backward. That’s why we’ve created an update to our State of Open Banking report that looks at how trends we predicted in 2019 have come to fruition while predicting some key Open Banking initiatives that will gain momentum this year.
The Pandemic Accelerates the Move to Open Banking
Not surprisingly, the global COVID-19 pandemic was the defining force of 2020, exacting countless profound changes—including new habits and preferences in the ways that consumers and businesses bank and transact. The result: since the first time we created our Open Banking report in 2019, we have witnessed an acceleration of new services, innovation, and potential with government-sanctioned, non-traditional currencies.
Work-from-home orders, lockdowns, and a broad shift to socially distanced working and living accelerated a number of financial trends in 2020—we believe that the five we’ve identified below will have the most impact on the global Open Banking ecosystem this year:
- Mobile banking, as consumers have made their mobile phones the centerpiece of modern living
- Global commerce and non-traditional currencies, with Bitcoin and other cryptocurrencies achieving numerous mainstream benchmarks
- New digital experiences as the very nature of banking, investing, and accounting is reimagined by innovations from both challenger banks and traditional players
- Intelligent accounts receivable/payable automation that rethinks concepts including expense management, corporate purchasing cards, payment acceptance, and debit payments
- Robotic process automation and artificial intelligence to streamline back office processes and provide consumers and commercial customers with valuable services and insights
Across the board, API integration technology and the ecosystem integrations they enable play an essential, catalytic role in bringing these new services to customers.
API Integration Accelerates the Move to Open Banking
If there’s one lesson we can take away from our 2019 report data and the qualitative examples our update provides, it’s that proactive adoption and adaptation are key. Compliance with regulations such as PSD2 (Revised Payment Service Directive, the European legislation that provides the framework for what open banking should look like) and others is not voluntary; a proactive approach is superior to reactive catch-up work in the future.
An effective API integration platform provides a straightforward way to leverage both old and new applications. Through a robust API integration platform, banks and fintechs can take a proactive approach to:
- Build integrated, high-performance ecosystems of financial applications
- Automate manual processes and eliminate the tedium of manual file formatting
- Seamlessly access banking services and synchronize data with third-party back office applications
- Create frictionless new services that monetize data in new ways, creating new revenue streams
- Modernize corporate (and consumer) banking data exchange across all solutions
- Enable straight-through real-time processing
- Provide partners and (other) fintechs a consistent way to write to APIs
- Accelerate the flow of cash through the system, unleashing new efficiencies
The journey to open banking is well underway. Banks and fintechs are now making the final leap to invest in the API integration capabilities that will propel them forward in the open banking world.
Discover more 2021 Open Banking trends in our new report, “2021 Open Banking Trends: Moving Forward, Faster.”