Open banking can ease 2020's shock to the payment system
The importance of online banking can be felt now more than ever as the ongoing pandemic has accelerated the preference for contactless payments. According to the recent Market Study Report, the global contactless payment market is depicted to grow at a CAGR of 11.7% from 2020 to2026.
Businesses are now scouting for the best services that help satisfy this emerging need. Open Banking and APIs offer a fountain of opportunities and innovation in how the management and transfer of money takes place today. In tandem, policy changes have opened new avenues for businesses and consumers alike: They now have the flexibility to choose from a wide range of financial options to suit their respective needs.
The Payments as a Service (PaaS) model automates global payments processing and can offer a range of services, enabling businesses to operate more cost-efficiently. The shock to the economy from the pandemic has only accelerated the adoption of this model across demographics.
An application of open banking, an open payments platform is scalable, flexible and customizable to your business needs and offers you and your customers visibility across all bank accounts.
A closed payments platform is more plug-and-play, without the degree of customization an open payments platform offers. There is very little room for traditional interest-based services. Rather, they work on a commission-based system, wherein platform providers don’t want their customers to gain access to all transactions.
Each platform serves different business needs. Businesses will continue to invest heavily in digital technology to address rapidly evolving customer preferences, mitigate risk and meet regulatory obligations. With the pandemic hindering trade across the world, timely payments and cash flow management under one roof will be at the forefront for many international businesses that are already struggling to adapt. Streamlining financial operations and offering flexibility and ease of payments to clients, via an all-in-one platform, will be crucial for staying at the top of the game.
According to the Deloitte Millennial Survey 2020, millennials will comprise 75% of the workforce by 2025. Organizations will need to foster innovative thinking and develop convenient and adaptable services. Millennial decision-makers will continually seek information online to support their banking choices and decisions. Thus, payments service providers will have to keep updating their services to suit this generation’s evolving needs for payments, transparency and flexibility.
For many businesses, COVID-19 has highlighted the importance of mitigating risks and embracing opportunities in times of crisis. The PaaS era has a lot to offer, especially to the high-impact business areas, with continuing technological advancements to suit evolving customer preferences.