Until now, consumers and small businesses have provided credentials to fintech firms in order to use their applications. The firms use these credentials to collect data from the consumer’s accounts via screen scraping. And although consumers and small businesses alike have now fully embraced the functionality provided by third-party fintech firms, financial institutions are opposed to the practice of screen scraping as they hold most of the risk.
Open banking is a collaborative model in which banks, credit unions and other similar regulated financial institutions are required to share their customers’ financial data with third parties upon request of their customers. In our latest white paper, The Future of Fintech’s Access to Financial Data with Open Banking, we breakdown the current landscape in the financial services space and the likely future of open banking in the U.S.
Currently, open banking is the law in Europe and the UK. While the U.S. has no regulatory framework in place for open banking, that could change if traditional banks prevent fintech firms from taking away their small business banking business.
The top 5 U.S. banks have already implemented their own APIs and OAuth 2.0 Servers to drive external third-party fintech companies to connect in a more secure manner than screen scraping. But what will it take for the financial services industry as a whole to be ready for open banking? This question could become even more critical if Congress is pressured by larger institutions to put an end to screen scraping all together.
In our white paper, we discuss the most likely outcome and what it will take for smaller institutions to maintain market share in a world where consumer access to their own financial data requires software that many of these institutions cannot create on their own.
Xtensifi is now offering open banking consulting services for both financial institutions and fintechs. We are pushing the concept of successful open banking further by enabling banks to be the primary hub for “when and where” consumers authorize their data.
Getting started is a straightforward process. Download The Future of Fintech’s Access to Financial Data with Open Banking or contact us today to find out how your institution can prepare for open banking to better serve your small business customers and grow your business.