As we start to feel the effects of the cost-of-living and cost-of-fuel crises, many people across the UK are worrying about their personal finances.
Many consumers are now looking for solutions to help them better understand how they can reduce their overall spend. And fortunately for consumers, there are a raft of fintechs waiting in the wings to help them do it.
Open Banking is waiting to help
Fintechs have been helping digital native consumers with their personal finance for many years now. You Need a Budget (YNAB) and Plum are prime examples of this, offering smarter ways to budget, invest and save.
Both of these companies’ services are underpinned by Open Banking, where APIs enable the apps to seamlessly and securely interact with third-party financial institutions.
Open Banking enables YNAB and Plum to offer greater transparency and more user-friendly financial services. Data is automatically integrated from the user’s bank, so the app’s services update in real-time. This interoperability means users always have a clear picture of their financial situation and any proactive recommendations from the app reflect their immediate situation.
Now could be the moment Open Banking has been waiting for
The community has been talking about the virtues of Open Banking for many years and there are some truly innovative use cases in the market, yet widespread adoption of Open Banking services has been relatively slow.
But now could be the time for Open Banking to go mainstream. Consumers are proactively trying to understand their finances: where their money is going, what they could cut back on, and how they can make it go further. And the interoperability, transparency and flexibility of Open Banking will be key to helping many consumers make smarter financial decisions.
What should Open Banking fintechs do today?
There is a massive opportunity for those fintechs already leveraging Open Banking to help consumers better manage their money during this difficult period.
The challenge they face is in helping consumers understand how services leveraging Open Banking – a term not well understood outside the fintech community – will help them get a clearer understanding of their financial situation and take better decisions.
Now is the time for fintechs to capitalise on the opportunity to genuinely help users with more innovative financial services. And if they manage to educate consumers on the way that Open Banking could help them make better financial decisions during this difficult period, it might finally be the moment when it achieves its promise.