Unveiling the Benefits, Challenges and Prospects of Open Banking – Blueprint Newspapers Limited

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Dr. Adesola Kazeem Adeduntan, Managing Director and CEO of First Bank

Ahead of the first Bank Fintech Summit 5.0 coming Thursday and on the theme “Open banking and its derivative opportunities for the financial ecosystem”, AMAKA IFEAKANDU examines some of the advantages, challenges and prospects of open banking in Nigeria.

The advancement of technology has placed the Nigerian banking industry on the fast track to adopt different innovations in order to provide excellent services, meet customer needs and stay relevant in the global financial system.

And characteristic of the organization, Nigeria’s first and largest financial services provider, First Bank of Nigeria Limited, is no slouch in this transformation process.

In its transformation process, the FBN announced the 5th edition of its Fintech Summit for 2021. The summit which began in 2016 has become an annual tradition that bank operators, investors and all stakeholders look forward to with impatience every year.

Interestingly, the event aims to bring together the brightest and most innovative experts who are at the forefront of digital innovation both locally and globally.

Since its inception, the First Bank Fintech Summit has been a physical event with an attendance of approximately 1000 participants. It has, however, become an online event in 2020 due to the COVID-19 pandemic which has ravaged the global economy.

FinTech 5.0 Summit

Announcing the 2021 summit, FBN management said this year’s theme, “Open Banking and Its Derivative Opportunity for the Financial Ecosystem” was selected against the backdrop of the increasingly important role open data is playing. , artificial intelligence and cloud-based technologies, in the broader tech space, but more specifically in financial services and financial technology landscapes.

He noted that the increasingly widespread intersection of these variables in various aspects of human enterprises represents a powerful force for the creation of new enterprises through a new gateway that will foster value creation or unlimited innovation.

The bank sees open banking as representative of such an intersection, rooting its roots in the financial services space but embodying the transformative potential capable of redefining customer satisfaction across the financial ecosystem landscape.

According to the bank, this will form the backbone of conversations around this year’s summit.

What is Open Banking?

Open banking refers to how financial institutions and third-party vendors leverage open application programming interfaces (APIs) to share data in a standard format to drive open, transparent, innovative and competitive banking services. .

It is also a banking practice that provides third-party financial service providers with open access to banking, transaction and other financial data of banks and non-bank financial institutions through the use of programming interfaces. applications (API).

Benefits for businesses and others

In addition to enabling the networking of accounts and data between institutions for the use of consumers, financial institutions and third-party service providers, open banking in today’s banking industry is becoming a major source of business intelligence. innovation that is about to reshape the banking industry.

In addition, it offers many benefits to financial service providers, businesses and banking customers, and the entire financial system.

And for financial service providers at the top of the chain, open banking will offer them the opportunity to significantly innovate in their product offering to businesses.

But on the side of businesses, whether small or large, the innovations brought by financial service providers will give them an efficient financial tool while doing their business, especially in the area of ​​payments, which involves automation and management. engaging human task puzzle removal.

On the customer side, open banking will bring better ways to spend, borrow and invest money.

In addition, this banking service is seen as a driver of innovation in the banking sector because it relies mainly on the network rather than on centralization. It should be noted, however, that this innovation can help financial services clients secure and share their financial data with other financial institutions.

With the FirstBank Fintech Summit 2021 focused on open banking, stakeholders in the bank are expected to gain broader knowledge on how best to access financial services offered by the industry.

Operating an open bank will be good news for First Bank customers, as an open banking model will allow them easier access to a wider range of financial services offered by a greater choice of providers. .

With open APIs, customers can choose to share their financial information with other financial institutions and third-party vendors, in order to access personalized product and service offerings.

Open APIs will make it much easier for bank customers to transfer their accounts, manage payments, and transact through other banks and FinTech, creating new opportunities for banks, FinTechs and aggregators to offer products and services from multiple vendors on one platform.

What challenges

Like any innovation, open banking comes with its own myriad of challenges, one of which is security and the absence of so-called “homogeneous technical standards, such as certain security requirements, combined with technological systems. complex internals ”. This can make the process vulnerable to corruption and fraudulent activity.

By creating complex chains of data access, it is also more difficult to prove who was at fault following theft.

The inclusion of third-party providers in the banking process is another concern. It is believed to increase the risk of crooks gaining access to customer information and their finances.

Likewise, the lack of education and awareness of open banking capabilities has made consumers less likely to consent to their data sharing, limiting the ability of banks and FinTechs to innovate.

What the research shows

A recent study from Accenture found that two-thirds of consumers would be unwilling to share their personal financial data with third-party providers.

Exit

The good thing though is that there is always a way out of these concerns. First, banks and FinTechs need to educate consumers on how open banking can improve, how they organize and take control of their finances, including monitoring spending and making better savings and decision decisions. ‘investment.

So, with the First Bank Fintech Summit focused on Open Banking, experts with many years of experience in the Fintech industry will address some of these pressing issues during the panel sessions.

In addition, the platform will also be a learning moment for all FirstBank customers and investors as well as for operators on how best to approach this new banking service.

First Bank’s digital transformation

The 5e Edition of the First Bank Fintech Summit will go a long way to complement FBN’s efforts to make its services user-friendly.

At different times, FBN has launched different products to facilitate banking operations for clients and compete favorably in the Nigerian banking system. Some of them include FirstBank Chat Banking, LIT App, Fast Track ATM, First Mobile App, First Online.

FirstBank Chat Banking, also known as WhatsApp banking channel, was introduced for customers who use the messaging platform. The product complements existing channels that include Unstructured Supplementary Service Data (USSD), Internet banking and mobile banking.

But the launch of the First track ATM by First Bank in 2020 was in response to curbing the spread of the Covid 19 pandemic and allows users to perform their regular activities such as transfers and withdrawals without an interface to machines while LIT applications created to revolutionize the culture and experience of mobile banking in Nigeria.

First Mobile, on the other hand, provides convenient access to financial and non-financial transactions by First Bank account holders through their mobile devices.

FirstMobile remains another obvious step towards harnessing evolving technologies to bring fast and convenient financial services closer to Nigerians, in line with the bank’s digital banking strategy.

As of June 2021, First Bank of Nigeria Limited had 4,596,203 users on the FirstMobile app, representing a 9% growth in total users from the previous year and an average of 27,730,830 transactions per month. With such sponsorship of over 30 million customers, the need to always create an easy way for customers to conduct financial transactions kicks in and, impressively, a dedicated platform that allows FirstBank customers to ‘Easily transact with their mobile phones, tablets and PCs is always within easy reach of customers.

FirstOnline is the Bank’s internet banking platform that provides unlimited and secure access to your account anytime, anywhere through any internet-connected device. This platform comes with stylish features, impeccable user experience, convenience and is easy to use. As of June 2021, FirstOnline had an impressive 597,466 customers, an increase of 17% over the previous year and 578,292 transactions per month, for an average value of 388 billion per month.

The first online designed to allow customers to transact any time of the day as there is no closing time

It also allows customers to enjoy a user-friendly and secure interface without external help or assistance and customers can transact seamlessly from the comfort of their room or workplace without incurring risk and loss. time associated with accessing the bank.

First Bank also sets itself apart by developing various banking applications to facilitate banking transactions for its customers.

The bank is also focusing on customer needs and building certain digital capabilities in order to be competitive, maintain its leading position in the industry and remain relevant in the digital age. Some industry watchers believe this is why FBN continues to attract new customers and grow daily.


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