Is the bank account opening process as quick as opening an account on Facebook, are your customers facing difficulty of it?
How long does it take for the KYC, Risk Preference Test progress, does it affect your potential customers to give up their application?
In 2015, Payment Services Directive was revised by the European Parliament, known as PSD2 that is the beginning of Open Banking. Under Open Banking framework, customers can own their data in banks and be able to get better deals. In 2019, Open Banking has been set up in UK and it has become the top priority for other monetary authorities to develop in their countries.
So, here is your solution.
In 2020, A call for input in relation of Open Finance was announced by the Financial Conduct Authority (FCA). This broad scope of Open Finance, including focus on individuals' total financial lives, makes it particularly relevant for the financial advice and wealth management industry. According to FCA, “Open Finance is an opportunity to build on the conceptual framework of Open Banking and allow consumers and SMEs to access and share their data with third party providers who can then use that data to develop innovative products and services which meet their needs today and in the future.”
According to the FCA Paper, potential customers can be benefited from:
• Automated switching and renewals, reducing the current friction and improving the ability to shop around (e.g. motor renewals)
• Developing personal financial management dashboard to allow consumers to have an entire view of their arrangements, allowing them to understand and optimise their financial position (of particular benefit for unadvised /disengaged clients)
• Accurate creditworthiness assessment and increased access to credit to allow third parties to see overall cash flow and identify suitable credit (e.g. prioritisation of debt repayments sequencing)
• Advice and financial support services by helping customers make financial decisions and making it easier for clients to share information with advisers/wealth managers (e.g. pre-population of KYC/fact-finding)
My perspective on Open Finance
At this stage, Open Finance is still open for input and discussion before it is official launched with policies. However, here is my perspective how Open Finance will affect the world.
I believe that everyone will have their own financial identity, and everyone will be able to access their KYC file/Risk Preference Analysis from their banks, then financial institutions could easily access the users’ net worth, money flow, KYC file and credit score under customers’ consent. The Financial Institutions will also be connected by Open Finance, since it can also reduce the pain of anti-money laundering, KYC and operation cost, e.g. the risk of money laundering will be greatly reduced since the very beginning of the source of fund will be found, and the default risk of the loan will also be reduced by knowing the net worth and money flow of the customers.
Of course, it potentially opens the door to pensions, insurance, mortgage, investment management, financial advisers, cryptocurrencies’ exchange. However, Consumers’ data protection would be the first priority on the scheme.
About the first Open Finance App - iPYGG
iPYGG consolidates bank accounts and takes care all of the financial needs via Open Finance and A.I.
Users' financial information will be analysed by AI and users will be advised the best financial moves to improve their financial status, e.g. asset evaluation, debt planning, Investment and taxation automation. All the process will be easily completed by Robot Process Automation (RPA). We aim to accelerate Personal Finance Management a completely different level.
I know this is just the beginning of Open Finance, please leave your comments below or PM me if you would like to discuss further.