The Beginnings of Open Banking

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Luiz Zorzella shares a summarized evolution story on Open Banking. 

If you are thinking your response to what is happening around Open Banking, this will provide you with some valuable historical context on how events evolved to get us where we are today:

It all started with online banking.

Before Open Banking, banks thought it would be a good idea to give their clients access to their accounts using the internet. 

So, since clients could access their accounts using online banking – some start-ups realized that if these customers provided them with their bank login information, they could log in on these accounts and manage them on their behalf.

Also, at that time, legislation was evolving.

In most of the World, there is customer data that banks cannot share, even if authorized by the customer.  For example, credit data.

However, in recent years, if, on the one hand, you see a tightening in data privacy protection, on the other hand, you also see the relaxation and regulation of financial data sharing.

These two factors – the spreading and deepening of online banking and the regulation of financial data sharing, beget a whole generation of fintechs. 

These start-ups had algorithms that logged in your account, copied the information displayed on the screen, interpreted that information and used this data to populate their database to provide you with their services.

 

Key points include:

  • The fallibility of algorithms
  • Accessing client data and functionality
  • Three types of APIs

 

Read the full article, Trailing the Peculiar Origin and History of Open Banking, on Amquant.com.