With the arrival of the digital revolution, sharing of data has
become easier as well as necessary. This requires the data
generated to be apportioned to all who might need it for various
purposes. This is where fintech (an amalgamation of the terms
finance and technology) firms come in. The data generated by
Financial Institutions including banks are shared with fintech
firms through the means of application programming interface
(APIs), which acts as the bridge between the two entities. Thus,
APIs facilitate data sharing in the banking sector, which brings
about the concept of open banking.
This has led to FIs offering consumer-centric and
personalized services.
Open Banking can be defined as a mechanism where data is shared
freely with the consent of the consumer, in order to generate the
required analytics and provide financial and other services. Since
consent is an essential ingredient of the concept of open banking,
it is popularly regarded that open banking
