Open Banking and Canada’s Financial Landscape
February 1, 2022
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The banking industry is in a constant state of flux!
New, innovative apps are being created every week. Staying on top of the right trends can be challenging for businesses. Open banking, however, is one trend we can all get behind. Open banking is not just a trend, but it is the future of fintech. A recent report released by the government’s advisory committee has recommended that Canada adopt an open banking system by 2023.
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There has never been a time more exciting (or opportunistic) when it comes to financial management for businesses. In this article, we’ll discuss why open banking is the future of Fintech and what that could mean for you. Let’s get started.
There are many ways open banking, and fintech companies are working together to revolutionize the financial landscape. Let’s look at a critical few.
Customized Apps and Services
The end-user can benefit from various products and services perfectly tailored to their needs. With unprecedented access to customer data, fintech apps can use these data to develop innovative offerings, like product feature comparative tools or features to help facilitate financial planning. An example of this might be a customer who has $5000 sitting in his bank. A fintech app might provide a tool to suggest where these funds could be invested to make the maximum amount of interest while waiting in the bank.
Better Understand Customers
By sharing consumer information with third-party applications, businesses can keep their finger on the pulse of consumer buying and spending habits and capitalize on new and burgeoning opportunities. Open banking allows users to assess, analyze, and track customer patterns associated with various products and services from one centralized location.
Optimized Customer Experience
Not only does open banking allow for a better understanding of customers’ buying and spending patterns, but it also gives businesses the upper hand by using the collected data to improve aspects like UX design, user interface, and the payment and purchasing process.
Challenges of Open Banking in Canada
As with any innovation, there are challenges along the way to success. Here are a few of the roadblocks fintechs face when it comes to open banking in Canada:
- Facing a complex system of financial services regulation. While federal rules manage banks, other businesses like credit unions are subject to provincial laws.
- Possibility of privacy breaches. With excellent knowledge comes great responsibility. Having access to this much consumer data puts the onus on the fintech companies to keep this information safe. Any security breach could be devastating.
- Removal of interpersonal relationships between the bank and the consumer. Although most financial transactions now take place online. The bank has always offered that face-to-face option for those who would like to deal with a teller to manage their finances. Fintechs take away that interpersonal relationship – this could be a pitfall for some consumers who prefer to deal with a natural person.
Canada’s fintech industry is thriving. New start-ups are entering the financial scene every day – providing niche financial products and services to Canadian business owners.
Businesses can leverage Kapital’s proper end-to-end open banking solutions, from data analytics with Kaptrak to digital payments by Kapcharge, to improve their services and achieve competitive advantages. Request a Call-Back to demonstrate our solutions’ capabilities. Get in touch with one of our team members at Kapital Solutions today to learn more about what open banking looks like in Canada and how your company can benefit from such an innovative solution.
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