Clive Humby, British Mathematician and Data Scientist famously said - "Data is the new oil".
From the value standpoint, Data – particularly financial data – holds the same value as oil in the world economy. Why is this so? asks Dr. K T Upadhyaya.
While Mr. Humby may have stated this purely from the value perspective, the analogy is perfect from another point of view. Data – like oil – lies in the banking corporate “wells”, often buried deep into file, databases, banking systems, ERP systems, legacy systems etc. To say that it is difficult to extract is an understatement.
Oil extraction companies have been using equipment and pipeline for ages to get the oil from wells to the refineries where it can be processed and to the gas stations where it is provided to the end user.
The Open Banking APIs are the “Data equivalent” of the oil exploration, extraction mechanism and the pipeline.
The financial industry has received a boon in the current Volatility, Uncertainty, Complexity and Ambiguity (VUCA) environment in the form of Open Banking APIs. They connect sources of banking data to the consumers of this data. Leveraging the information made available by the banks and companies in the Banking, Financial Services, and Insurance sector (BFSI) segment, fintech companies are now able to create products and services for retail and business customer. This connectivity has led to an unprecedented rush of such revolutionary products and services and the customers are hungry for more, as they are being provided with solutions to problems that have persisted for ages.
This demand from customers for better financial products and services, coupled with the constant nudging to the banks from regulators, and drive from fintech companies to provide innovative solutions to Retail and B2B customers has led to a fertile ground for implementation of an ecosystem and accelerate the growth of Open Banking APIs.
The fintech companies have already created solutions for the retail consumers that include aggregation of various bank accounts, credit cards, bill payment scheduling, loan requests etc. Now the focus is shifting towards B2B banking arena.
Smart banks are using the Open Banking API ecosystem to provide innovative solution to B2B customers. Businesses are now able to achieve a unified view of their various bank accounts aggregated into a Dashboard view, showing the transactions and current balance. Uniquely, Starfish Digital is taking Open Banking API usage to the next level, by connecting not only the banking accounts, but also the ERP systems of the corporates. Leveraging the open banking APIs to get financial transaction data from banks and forecast of income and liabilities from data from the ERP, the liquidity positions can be forecast.
Such products cannot be envisaged without the open banking APIs. The offerings will surely extend into management of working capital of the organisation, and other important financial decision-making processes, that govern the financial health of the organization.
The current flurry of products and services are just the tip of the iceberg. Who knows what is next as the possibilities are limited only by the imagination of both consumers and the providers.
The Open Banking API revolution is truly upon us, and it is up to us to embrace the benefits that it will provide to both companies and corporate banks.