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What is open finance? How does it matter to me?

Aug 04, 2021 2 minute read Shafrena Sapari

You may or may not have heard about open finance but unknowingly, you must have experienced it, especially during this pandemic. Financial transactions have to be done during lockdowns and quarantines. Whilst staying home, you may realise that you are still utilising ride-hailing applications such as Grab or Gojek for other services like meal deliveries, groceries, courier services and even financial management like purchasing insurance and investment. Those applications now serve as an embedded finance that is powered by open finance! Let’s dive deeper on how we’ve transitioned to open finance and what it means for end users like you and me.

What is open finance? How does it matter to me?

Open finance unbundles financial services and products that were owned by banks to be made available outside traditional banking processes through technology. Non-financial companies such as ride-hailing, insurance or even healthcare companies can now offer financial solutions within their ecosystem. For example PropertyGuru, a leading property website in Singapore, can now offer loans within their website.

What open finance means for banks?

Open finance offers new growth and distribution opportunities. While the pandemic accelerated digital adoption, banks are beginning to notice the benefits of unbundling their products and services as technology. With the conversion, banks could keep up with the digital finance opportunities and find new ways to create value while staying relevant. For example, being available in a non-traditional process known as embedded finance. Besides that, banks have the competitive advantage of having access to banking licenses, massive data, customer trust, and expertise in core financial infrastructure. In other words, now’s the time for banks in Southeast Asia to transition to open finance.

What open finance means for end users like us?

Convenience is one of the many. Open finance unlocks a new phenomenon known as embedded finance, where all your financial needs are serviced within the same product. While security is often the main concern for end users, open finance technology taps on APIs where information shared across can only be authorized by end users and are transacted on encrypted connection. Data layer is also applied to ensure restricted access.

If you’re interested to know more about open finance in Southeast Asia, download the white paper today!

Join us in the upcoming webinar as we discuss the the recently joint published white paper titled Embracing Open Finance in Southeast Asia. We will cover:

  • The commercial opportunities for banks in open finance; new growth and distribution opportunities and new ways to create value
  • Explore how banks and other financial service providers can overcome challenges to open finance adoption
  • Practical next steps in embracing opening finance

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