Essence of Open Banking

In the early stage of Open Banking, data openness was paid more attention because in the era of big data, bank data was recognized as an important “factor of production” with great value but severely underdeveloped. How to make the data owned by banks be used by third parties through reasonable rules and methods has become an important subject in the fintech era.

First of all, the essence of Open Banking is financial data sharing. The core and essence are to re-integrate and configure data as a factor of production or valuable asset in order to encourage financial innovation, discover new financial needs, and create more customized financial products and services that are more convenient and more affordable with lower transaction costs. This will comprehensively improve the level of financial services that benefit all people and enhance the competitiveness of the country’s financial industry. At present, the degree of development of Open Banking has become an important manifestation of the competitiveness of a country’s financial industry. Therefore, in the era of big data, Open Banking is an emerging financial format.

Secondly, the importance of Open Banking not only lies in that it is a new financial format emerging in the era of big data, but also in that it changes the basic relationship between financial data ownership and use rights. In traditional financial institutions and markets, customer account information and bank data are not only closed “data islands”, but also assets owned solely by banks and financial institutions. Under this circumstance, it is impossible for customers to integrate and effectively utilize the data of their multiple banks.

Open Banking financial data sharing means that under the premise of customer authorization, fintech companies can obtain customer-related financial data through new technical tools and conditions and create customized financial services suitable for customers based on customer wishes. At this time, the ownership and use rights of financial data are basically transferred to the customer. It is this major change in the basic relationship between ownership and use rights of financial data that may become a huge driving force for stimulating potential financial demand and financial innovation in the market. As a result, the financial industry has also transformed from a traditional product-centric business model to a customer-centric business model.