Open Banking is a financial technology (fintech) term. It refers to the process where open APIs (application programme interface) can be used by third parties to build digital applications which can perform a range of tasks and functions to facilitate the sharing of financial data.
This sharing of data can be used to speed up financial applications, improve recommendations of services for consumers and businesses and optimise mobile banking services. Open Banking can also be used to improve the flow of financial information between institutions and their customers by reducing manual tasks – such as sharing bank statements and transaction data for credit referencing.
The concept is not without its critics. It has been argued that increased sharing of transactional data from consumers to financial institutions could result in people on lower incomes being ‘financially excluded’ as companies would be able to see how they run their personal bank accounts. Some also feel that consumers will not willingly want to share their financial data.
How is Optimum Finance using Open Banking?
We are using Open Banking technology to speed up the application process for our clients when they apply to us for funding. Previously manual tasks such as downloading and sending statements and company information to us can now be automated thanks to Open Banking technology.
Myth busting – Open Accounting explained
Open Accounting is a relatively new term to describe the same process of Open Banking where financial data is shared between parties. Open Banking more widely refers to the sharing of financial transaction data from bank account sources whereas Open Accounting is the sharing of accounting data from a business to a financial institution.
Open Accounting describes the process where open APIs are used to enable businesses to give permission for the information contained in their accounting system – whether online or offline can be accessed by financial companies.
How is Optimum Finance using Open Accounting?
Our clients use a mixture of online software accounting packages, such as Xero or Sage, and traditional off line systems. We are using Open Accounting technology to enable the sharing of information between our clients and their account managers. This is speeding up and automating the regular transfer of data – as clients will no longer need to manually upload their financial documents such as invoices, balance sheets and profit and loss statements. This leaves more time for our account managers to focus on added value business consultancy services and advising on business growth strategies.
Myth busting – what are APIs?
API stands for application programme interface.
At its most basic level APIs enable digital applications to talk to each other.
API describes a set of digital protocols, processes, routines and tools which can be used to build software programmes. Good APIs make it easier to create and programme new applications.
Myth busting – what is ‘fintech’?
Fintech is a recently coined descriptive term short for ‘financial technology’.
With financial organisations increasingly developing new software to improve financial and transactional processes businesses which are creating their own programmes often describe themselves as ‘fintech’ businesses.Categories: Blog