How Open Banking Is Reshaping Financial Planning

Open banking lets banks and other financial institutions use APIs to access and control consumer banking and financial accounts. The system opens the doors to myriad growth opportunities for these institutions. It also raises the bar for API developers.

Developers must deliver APIs that provide consumers with convenient access to financial data and services. At the same time, they must keep API costs low for financial institutions. Developers must manage API security risks and do everything in their power to keep their financial data safe, too.

A clear understanding of open banking is a must for API developers. Those who understand the opportunities and challenges associated with open banking can deliver APIs that meet the expectations of consumers and financial institutions. Plus, they can produce APIs that revolutionize the financial planning experience.

Why Open Banking APIs for Financial Planning Are Key

Financial planning helps people establish financial goals and the steps required to achieve them. It typically involves working with a financial planner to review a client’s finances. From here, the planner offers tips, recommendations, and insights to help their client set realistic financial goals. The planner and their client work together to accomplish these aspirations.

With a financial plan in place, anyone can achieve financial milestones. For instance, someone who wants to buy a home can establish a plan to save money to cover the costs of a down payment and mortgage. Or, an individual can plan to ensure sufficient funds for retirement.

Open banking APIs give consumers greater access to financial planning tools and resources than ever before. Examples of open banking APIs include:

  • Account Aggregation: Provides an overview of bank, investment, and other financial accounts.
  • Account Setup: Lets a consumer set up a new account with a bank or credit union via their mobile device.
  • Subscription Management: Offers insights into a consumer’s recurring subscription payments.

American Express, Plaid, and many other globally recognized brands offer open banking APIs. Furthermore, the number of open banking APIs for financial planning may continue to increase. These APIs break down a technology barrier that previously limited consumers’ access to financial planning tools and resources. In doing so, the APIs empower consumers to be proactive as they try to map out their financial futures.

Meanwhile, financial institutions are increasingly leveraging open banking APIs in the hopes of optimizing the customer experience. These institutions can use open banking APIs to provide clients with real-time access to their financial plans. The APIs let clients seamlessly review and adjust their financial goals. As a result, financial institutions can leverage open banking APIs to boost customer engagement and increase their earnings.

Let’s not forget about the financial planning cost and time savings open banking APIs provide for consumers and financial institutions, either.

Consumers can use these APIs to access financial planning tools and resources via their smartphone or tablet without the need to visit a financial institution in person. They can then collaborate with a financial institution to craft and maintain a plan that matches their expectations.

Moreover, financial institutions can work with developers to create, launch, and maintain open banking APIs. They can track the results of their APIs and ensure these interfaces deliver substantial ROI.

Open Banking APIs for Financial Planning Are Evolving

There is no one-size-fits-all open banking API for financial planning. Instead, developers at financial institutions are creating open banking APIs with a wide range of features.

Open banking APIs for financial planning have been developed in conjunction with financial institutions’ mobile apps. The APIs ensure consumers can use these apps to securely access financial planning tools and resources. They verify consumers can safely share a wealth of financial data and complete transactions at their convenience.

Developers are tasked with providing open banking APIs that ensure consumers can enjoy memorable experiences. But the APIs must also comply with various data security mandates.

In the European Union, developers must create open banking APIs per the Payment Services Directive (PSD2). To do so, they must produce open banking APIs that provide access to the same consumer financial data as the financial institutions that initially generated the data.

Comparatively, the United States has released few details on how open banking APIs should be developed and implemented. In October 2020, the Consumer Financial Protection Bureau (CFPB) released the Advanced Notice of Proposed Rulemaking (ANPR) on Dodd-Frank Section 1033, which confirms that consumers have a right to access their financial data by open banking APIs. Yet, CFPB has not taken any additional steps to define how developers should consistently provide secure access to this data.

The evolution of open banking APIs is underway, and it shows no signs of slowing down. This could lead to new regulations surrounding open banking APIs. Developers must keep pace with these regulations to verify their APIs are secure and convenient. They must also be proactive as they try to create APIs that meet the needs of consumers and financial institutions.

Open Banking API Developers Must Prioritize Security

To deliver open banking APIs for financial planning that provide consumers with great experiences, developers must put security front and center. Failure to do so can compromise customers’ financial data. It can also expose a financial institution to data security compliance penalties, revenue losses, and brand reputation damage.

Emphasizing digital forensics can make a world of difference relative to the security of open banking APIs. Developers can learn about the data used by financial institutions and their consumers. They can evaluate the dangers that can arise if this data is compromised. And they can determine appropriate measures to verify their open banking APIs keep financial data secure.

Developers can also meet with financial institutions and learn about their open banking API expectations. These institutions can explain what they want to get out of their open banking APIs. Then, developers can collaborate with financial institutions to deliver APIs that blend security and convenience.

Finally, developers must stay up to date regarding open banking API regulations. Lawmakers look poised to pass measures that could change how open banking APIs are implemented and managed. Developers must follow these regulations and ensure their APIs can be used according to the most up-to-date requirements.

For more on Open Banking, our sponsor Curity has many learning resources on Open Banking and Financial-grade APIs.

Provide Open Banking APIs That Reshape the Financial Planning Experience

Open banking is driving innovation in financial planning. Developers who understand open banking are well-equipped to deliver APIs that transform the financial planning experience.

Learn the ins and outs of open banking and maintain a security-first approach to API development. That way, developers can create open banking APIs for financial planning that deliver long-lasting results.