Open Banking And The Banking Of Data

3 min readDec 13, 2019


Open banking is when banks provide access to the user’s financial data to third parties with the user’s consent. Open banking aims to stimulate competition and innovation among companies, therefore, improving customer experience.

When banks share user data, they do it through the API technology.

An API (application programming interface) is a simple and standardized means by which technology platforms from different vendors or locations communicate with each other. A common example of a successful API is EMail. Regardless of which service provider a user sends an email from, it will be received by the intended recipient. In the financial world, the ATM card is a popular example of an API, no matter its country of issuance will work on any ATM in any country unless it is restricted for some reason.

Open banking is gaining ground exponentially as more banks are adopting the concept either as a regulatory requirement or as an innovative move. Customers are constantly looking for easier and more seamless ways to conduct their financial transactions and banks are being driven by these demands to adopt open banking.

In an era where data is a currency, sharing such data may seem like a foolhardy move. However, there are benefits attached to it. For example, banks will be able to gain more insight into a customer’s profile by gathering data about their behaviour from different sources like insurance companies, credit bureaus, investment platforms e.t.c, all of whom have different views of the same customer.

How open banking is helping users:

— Ease of banking: HSBC Bank’s Connected Money app, launched in May 2018 allowed customers to view their accounts at up to 21 different banks in a single app. The app, now discontinued, aggregated all the customer’s banking relationships and allowed the customer to see and analyze their financial data, giving them insights into their spending habits.

— Financial management: In Nigeria, Reach, an expense tracking app uses information from a user’s texts to help them to budget, track their expenses and their bank balances.

— Ease of access to credit: Open banking will allow users to access loans easily as all necessary information about a customer e.g, their salary, total income, can now be easily accessed by the lending institution. This shortens the usually tedious process.

— Cheaper and more innovative products and services: Customers will now find it easier to compare between several financial products and choose the best for themselves. This means that the service providers will be forced to differentiate themselves in a fair and open market.

Kaoshi is leveraging on open banking by partnering with banks to use customers’ data, with customers’ consent, to improve the cross-border money transfer experience for customers. Kaoshi does this by providing a platform where remittance services are aggregated, allowing the customer to shop from a plethora of remittance options

This is making transactions easier and safer for customers who would otherwise have resorted to the informal peer to peer market to process their currency transfers.




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