If open banking were a colour - it would be green

Did you know that approximately 94% of European citizens believe that protecting the environment is very important, while only little over 80% of them would agree to be part of actions protecting the environment? 80 percent doesn't seem enough, considering that environmental damage is increasing daily. The good news is that things have begun moving in a better direction, and open banking is partly to œblame for it. Its major scopes revolve around providing greater financial transparency and innovative services but its positive impact goes beyond that.

Although open banking has been around for several years now, we've recently witnessed greater adoption globally, as digitalisation became a worldwide priority. Plenty of services migrated online. Individuals and businesses have experienced the sweet taste of online operations and they aren't willing to give that up. Companies and institutions are riding the open banking wave - a wave that the majority of consumers is intensely encouraging, especially now, when this majority consists of millennials.

For them, words like œsustainability, œeco, œgreen mean much more today than yesterday. All sectors are going through this transformation, including banking. 

This digitalisation-process has been strongly enhanced in the past years, taking a big leap forward. Open banking is a phenomenon embraced by countries around the world, helping financial institutions, from banks to lenders and accounting services, digitalise their operations and use less plastic and paper than ever. 

When banking gets its eco-shot

Fintech's concept has seriously evolved ever since its appearance, including with the help of open banking. As time passed and open banking regulations began to be adopted globally, the fintech services range became wider, now embracing lending, PFMs, loyalty programs, insurance, bookkeeping, etc. Accordingly, in a quite short period, banking and financial services got injected with some green DNA, thus affecting and perturbing other economic sectors. 

While at a first sight connecting open banking to ecology seems complicated, looking deeper, you'll notice that it has become a big part of a conscious lifestyle and business, at multiple levels. 

Green is the new black 

We hear œgreen more often nowadays and it doesn't refer exclusively to the happy colour. Green businesses, green credits, green investments, green everything - companies from all over the world are adjusting their strategies, offerings, and marketing targets towards more than just making a profit. They want (and need) to be in-line with what most consumers expect - sustainability. From their perspective, open banking has played an important role in digitisation. 

Innovative open banking services have a direct positive impact on the accessibility of natural resources and their rational usage. Just look at how open banking has helped businesses transfer offline operations to the online environment, replacing traditional ways that required tremendous amounts of paper.

Here are some of the most common open banking use cases and how they directly support sustainable development:

1. Open banking in lending & credit risk analysis leading to financial inclusion

Businesses like Credit Hero and Lendex have turned to Salt Edge for open banking solutions to ensure a wider financial inclusion for their customers. This is probably the domain where open banking has the most noticeable impact, allowing individuals and businesses access to funds otherwise unreachable to them. Using open banking data enables lenders to give a second chance for credit approval to potentially great loan-applicants who have initially been rejected simply due to lack of credit history (first-time borrowers, migrants). Besides, open banking cancels potential manipulations in physical bank statements, while helping financial institutions save on fraud decisioning, underwriting, or credit risk related issues. Lenders see the authentic financial picture of potential borrowers and tailor their offering to the real-time status-quo.

2.         Open banking in PFMs contributing to a more responsible financial behaviour

We live in a consumerism era. And, while most of us don't even realise it, PFMs like Spendee, MoneyWiz, and Planner Bee manage to comprise all bank data based on open banking capabilities and transform it into a picture detailing the users' financial behaviour and the areas that need adjustments. Thus, end-users can shift from reckless expenses to a more rational, sustainable lifestyle. 

What we've carefully observed throughout our clients is that, by leveraging open banking possibilities, their companies become more viable. This is obvious, since open banking contributes to preserving ecology balance by:

• Stimulating behavioural changes

• Cutting down on unjustifiable consumerism 

• Enhancing green finances (green lending & investing)

• Improving financial inclusion for underserved categories by simplifying bank data sharing even across continents, for expats, and introducing alternative reliable data sources for credit analysis for people with thin credit file 

• Reducing the plastic cards and cash use.

Changing the traditional banking paradigm became possible because of many factors: the obvious increased competition but also the concerns regarding the environment we live in and the upcoming generations' future. All this has catalysed the global digital revolution, forcing the banking sector to catch-up. This is where Salt Edge pitches in: we stand for helping businesses become more viable and sustainable: short, medium, and long term. Sustainable businesses lead to overall sustainable development. And that is what we all want.

About Salt Edge
Salt Edge “ a financial API platform with PSD2 and open banking solutions. The company has two main vectors of activity: enabling third parties to get access to bank channels via a unified gateway, and developing the technology necessary for banks to become compliant with the directive's requirements. ISO 27001 certified and AISP licensed under PSD2, the company employs the highest international security measures to ensure stable and reliable connections between financial institutions and their customers. The company is integrated with 5000+ financial institutions in 50+ countries

More information: www.saltedge.com
Phone number: +1-437-886-3969
Email: press@saltedge.com

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