IBM: Open Banking Among Top 2024 Trends for Financial Services
We're beginning the second half of 2024, a great time to examine the trends of the year.
In a recent post, IBM examined what they consider the seven top financial services trends of 2024. They are as follows:
- Generative AI
- Hybrid cloud technology
- Cybersecurity risk management
- Sustainability
- Customer experience
- Open banking
- Digital currencies
Open Banking Takes Center Stage
As we've noted previously, three-quarters of banks say they aren’t ready for open banking, according to recent data published by Sopra. However, open banking provades many benefits, including:
- Embrace of technological advancements for enhanced customer experience
- The disruptive impact of open banking and APIs
- Unleashing new revenue streams and operational efficiency
- Fostering collaboration and innovation
- Envisioning a hyper-personalized future
- Operational benefits and enhanced security
As noted by IBM:
The premise of open banking is it provides secure access to a customer’s financial data from traditional banks and other financial institutions using application programming interfaces, also known as APIs.
The use of open banking is expected to increase as customers seek to take control of who has access to their data. APIs may likely become the preferred method to help banks connect technologies to their internal systems and streamline processes.
According to CSI, open banking offers "adaptability" to financial institutions, enabling them to integrate the latest technologies.
Financial institutions may not always have the time or resources to build new digital products, so connecting with a technology provider helps them more easily “plug in” new offerings without having to develop them internally. Transforming the core into an upgradeable platform also enables institutions to add modular features like video chat, digital account opening, or real-time transfers much faster.
Open Banking and Check Processing
Of course, OrboGraph cannot help but tie open banking back to checks. The industry can now abandon the "check is dead" narrative, as it's estimated over 10B checks are written each year. Furthermore, this narrative is a major reason why check fraud has proliferated. The lack of investment in checks has lead to fraudsters exploiting the channel.
However, companies like OrboGraph are still investing in checks, developing AI and machine learning technologies like OrbNet AI to automate check processing and OrbNet Forensic AI to detect check fraud. Open banking through APIs enable banks of all sizes to reap benefits, as banks can leverage these technologies through their core processors or other third party vendors.
For check processing automation, core platforms have integrated these technologies and increased accuracy and read rates to over 99%. For check fraud detection, both core platforms and third party vendors are leveraging AI and machine learning technologies into their solutions, achieving 95%+ detection rates.