Eight problems that Open Banking solves

Eight problems that Open Banking solves

Archie - 26/2/23

From lower transaction fees to auto-saving apps, Open Banking provides all sorts of problem-busting benefits to both consumers and businesses

Open Banking allows customers to share their financial data with authorised and regulated third-party providers as well as authorise a payment directly from their bank account: but why should anyone care? It all might sound very technical and abstract, but there are loads of real-world ways that Open Banking can hugely help both individuals and companies.

We’ve zoned in on a handful of everyday problem areas, and explained exactly how Open Banking provides the solution. And as this is all still so new, we’re currently just scratching the surface of its potential – there are lots more exciting things to come!

The consumer problem: it’s too easy to lose track of finances across different accounts

When you’ve got your Netflix subscription coming out of your current account, you’ve just popped brunch onto your Monzo and you’ve whacked a big summer holiday on your credit card, it’s very easy to lose track of your finances.

With Open Banking, consumers can pull all their financial information together in one dashboard – making it much easier to keep track of exactly where the money is going and see where they could make savings.

The business problem: poor customer service

The better a business understands its customers, the better service it will be able to offer – and of course, the reverse is also true.

With Open Banking, consumers give consent to share their financial data with regulated third-party providers. This allows businesses to access more in-depth insights into their clientele, and even offers a new perspective on individual customers.

As Open Banking instantly shares up-to-date information, organisations can streamline processes, scrap lengthy onboarding systems and bin those reams of boring paperwork for customers to fill out – not to mention, use the data to explore potential new revenue streams.

The consumer problem: it’s a struggle to save money

Saving money can feel really difficult – but, like most things in modern life, there are apps that can help you with that.

Open Banking makes the tech possible for things like automatic saving apps to exist. These instantly eliminate any agonising over how much you can afford to save by working it out for you and moving your money over to an online savings account. Couldn’t be easier!

The business problem: products that aren’t quite right

There are plenty of circumstances where one-size-fits-all solutions just won’t work. Accessing customers’ financial data through Open Banking allows businesses to provide personalised products: for example, apps that make tailored savings recommendations.

The consumer problem: wasting time dealing with boring admin

From having to track down your bank card every time you want to buy something to manually printing off years’ worth of bank statements when applying for a mortgage: in the old days, pretty much every type of financial dealing involved some degree of admin.

Open Banking eliminates all of that. Customers can give consent to mortgage lenders, for example, to automatically access their financial information without having to even login to their accounts.

And making payments is easier than ever with Open Banking: as customers authorise the money to be taken directly from their bank account, they won’t even need to enter their card details.

The business problem: expensive payment processing fees

Costly card payment processing fees eating into a business’ profits used to be a necessary annoyance – but not anymore.

With Open Banking, the customer authorises a payment to come directly from their bank account, cutting out the transactional middlemen and making it a whole load cheaper (and faster) than traditional methods: at least 70% cheaper, to be exact.

The consumer problem: being held back by a poor credit score

It’s kind of a vicious circle: the less credit history a customer has, the greater the risk that they’ll be denied credit.

By sharing real time access to their bank account, could unlock a new way of obtaining credit.

The business problem: unpredictable cash flow

Businesses can take advantage of Open Banking-driven accountancy tech to see all of their outgoings and incomings in one place and in real time.

This makes it much easier to keep track of cash flow and, in turn, run a successful business and efficiently plan for the future.

Do you have any questions or want more information about Open Banking?

We’re advocates of keeping the market as clear and accessible as possible. For any advice or support, get in touch with our friendly experts.

At Archie, everything starts with a hi... So however you say hi - say hi back.