Open Banking is a new technology tailored to the challenges of the modern world. The use of remote channels is growing day by day, which is seen in all areas, so there is a demand in the banking sector to simplify remote services as much as possible and make the management of financial resources more practical for customers. The idea of open banking means sharing information of different banks through one mobile bank, accessing it, viewing all products, which in itself allows customers to compare terms and offers. This platform puts financial institutions in a competitive environment, which should logically reflect on the improvement of services. Their goal will be to identify the needs of the customers and offer the best option.

In countries where the system has already been adapted and is being used successfully, there has been an advancement / development of financial technology companies. It is one of the links in the process of open banking. In the newly introduced system, three main parties participate:

1. Customer

2. Financial organization

3. Provider, additional service provider, which may be a commercial bank or fintech company.

The above three parties cooperate with each other in the following order: Financial institutions transmit information about the consumer’s financial products to the providers with the consumer’s permission, and they combine this information and provide it to the customer.

The effectiveness of open banking is manifested in its flexible system. For example, the possibility of merging services means that if you use the services of several banks at the same time, you can gather everything in one digital channel – if necessary, provide one bank with an extract from another bank or the information you need, which will reduce the time of receiving services.

The standards of the open banking system, security and other important issues are regulated by the existing legislation in the country. Changes in the legislation have already started to introduce this technology in Georgia. Under these changes, commercial banks are required to make certain information available to providers. This is one of the most important steps in the success of the whole process. Initially, the customer will have access to the information, but gradually s/he will be able to control the accounts or loans.

Editor’s blog

Source: