Open Banking & Finance Trends 2024
In 2024, the notions of Open Finance and “FiDA” are more concrete than ever: this is definitely one of the challenges to look for and opportunities to seize for the financial services industry, in the months to come. Moreover, on the payments side, we also expect a larger variety of Open Banking payments – and the value they could provide for various stakeholders. And of course, with the latest AI progress and incredible tools that surface lately, one key topic will be to integrate AI within the Open Banking & Finance ecosystem. Here are our top 5 Open Banking/Finance trends to look for in 2024!
#1 Preparing for Open Finance
2023 was the year when FiDA (Financial Data Access framework) was brought to light. And it inevitably led to many companies starting to investigate it: what will be the main challenges? What about opportunities? And risks?
2024 will continue in the same direction, with the financial industry prepping for this revolution, thinking of concrete – and sometimes simple – use cases that will bring extra value to themselves, their partners or, of course, their end customers.
Figure out where you want to be positioned in this new – open – ecosystem and the role you want to play in it. Check out the “Open Finance Do’s & Don’t’s” to help you with this very necessary exercise.
#2 Expect embedded payments to grow
Payments are becoming more and more integrated into customer journeys to even become a commodity. For instance, payments are increasingly integrated into software solutions, online portals or social media apps, etc. Paying/purchasing is not a specific experience anymore, it is part of a larger customer journey.
Open Banking-powered payments – which are cheaper and actually more secure – aim at being embedded by definition. And as highlighted in INNOPAY’s latest Open Banking Monitor, the number and scope of payments APIs is constantly rising with specific features and to answer to different needs and use cases. Moreover, with the future Instant Payment Regulation that will generalize immediate and non-revocable funds settlement in the European Union, the number of payments APIs is expected to rise.
#3 Reducing fraud through A2A payments
Instant, account to account (A2A), Open Banking-powered payments offer an efficient solution to minimize fraud, as they are authorized through the user’s usual banking app, by leveraging two or three factor authentication.
Moreover, the upcoming Instant Payment Regulation will require banks to offer IBAN-name checks services to their customers, adding one more security layer.
Andin the future, with PSD3 and its larger scope than PSD2, additional steps towards more security will be taken, by improving Strong Customer Authentication (SCA) processes and by enforcing stricter access rules that still need to be defined.
#4 Putting customers at the center
If Open Banking – soon to be extended to Open Finance – is all about opening up and providing access to data, it can only be done with the permission of the customer.
The concept of “permission dashboard”, one of the concrete features which was introduced in the FiDA proposal published last June, aims at giving more visibility on the permissions that have been given to companies offering different types of Open Finance-related services.
In 2024, we therefore expect more services and tools to be developed in that sense, all having one thing in common: more transparency and control for the end customers.
#5 Providing more actionable insights with AI
The power of Artificial Intelligence is unmatched. Last year, we saw the rise of the likes of ChatGPT, Mid Journey and several others. Combining such capacities with Open Finance and especially financial data aggregation solutions means that relevant insights could now be turned into actionable and efficient actions.
For instance, in terms of banking transactions data enrichment, much more than “simple” categorization could be now possible: thanks to the analytical capacities of AI, one could extract actionable insights and recommendations for more accurate financial products. These would be more adapted to the user’s profile, at a specific moment in his/her life journey: welcoming a child, moving out, etc.