“Open-banking: we too often pay the cost of slowness”

Thanks to the PSD2 directive, we can now share financial data with third parties, making payment account information more visible. Since 2019, apps have been sprouting that take on the role of banker or accountant. Those new fintechs have improved the customer experience, but open banking is still too much a work in progress. Provided full banking and financial integration, fintechs and banks could offer a 24-hour digital banking advisor. This would help consumers manage their finances smarter and enable companies to reduce cash flow risks. Today, our Belgian SMEs too often pay the price of slow financial decision-making.

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An impulse purchase or an investment decision based on outdated information can be detrimental to private savings and an organization’s cash flow, respectively. While you just do the best business when you are very reactive. Making the right choice at the right time is not always easy. Open banking can help here enormously: your financial data, current payments and current financial profile are perfectly integrated.

An advisory app could assist us in these well-considered decisions with a real-time answer to every financial question. Open banking can thus encourage a more responsible use of money, both for companies and individuals. This would prevent over-indebtedness and bankruptcy.

Responsible spending

At the same time, we also see a growing demand for more sustainable money management. The goal would be to encourage investments that are more environmentally friendly and more mindful of the impact on our society. Why not add an extension to our browser that helps store more environmentally friendly? That plugin could, for example, turn displayed prices into red or green, and indicate whether a purchase is financially feasible or a reasonable choice according to the consumer’s profile. The tool could better guide our decisions, without the need for every e-commerce platform in the world to have access to customers’ bank details.

Our financial system would work completely differently: our banking application could choose a new energy supplier for us, based on our finances and values. In a way, Aion Bank already does that, but they seem to choose the cheapest supplier without evaluating other criteria. In France, some fintechs are just now offering services for more sustainable spending through a system of ecological scores, but for now without a banking link.

Rising demand

Financial management based on open data is gradually becoming established. Fintechs have long been convinced that open banking will make money management more transparent, responsible and environmentally friendly. The banks themselves have long feared disintermediation, that they would have to give up communication with their customers. Yet they still hold the key to customer intimacy, for a personalized banking experience that seems to be becoming the norm. Banks are increasingly seeing the value of it. Reducing the risk of bankruptcy or debt thanks to better advice based on data is in itself a motivating argument.

The pandemic has accelerated this trend. Many companies were forced to make decisions faster than before. That called for more automation than before. The road to smarter, almost instant finance, has begun. In the not too distant future, this will help to make better choices about spending, saving and investing.