Improving Personal Finance Service with Open Finance Technology
16 March 2022
Author by Nida Amalia

Improving Personal Finance Service with Open Finance Technology

Improving Personal Finance Service with Open Finance Technology

Based on the results of the Financial Services Authority’s (FSA) National Survey of Financial Literacy and Inclusion in 2019, the national financial literacy index has just achieved 38.03%. By 2024, the government has the ambitious target of increasing this percentage to 90%. Various attempts have been made to make it true, including providing the relevant ecosystem of financial technology. It aims to create various innovative Personal Finance services to become more accessible and comprehensive for the community.

The application of the Personal Finance Service will allow consumers’ financial products to be increased by varying the characteristics and needs of each unique user. In addition, with an intuitive data dashboard displayed, users can easily understand their financial condition. So, they can manage their finances and make better financial decisions.

Personal Finance Service is also one of the use cases provided by Open Finance, similar to the one developed by Finantier. Through such a platform, a number of financial technology modules can be applied to develop a financial system that is more personalized.

What is Personal Finance?

Personal Finance is a financial product intended to record, manage, and provide an overview of the users’ personal finance. In the Open Finance context, Personal Finance platforms can be embedded into various types of financial services to perform a variety of specific functions, for example:

  • Financial transaction records; Intended to help the users manage their personal cash flow, budget, or control the allocation of their money and get a report of their current financial condition. The application of the Personal Finance platform is made by providing a dashboard to help users understand the financial condition in real-time — this can be in the form of a historical report, chart, etc.
  • Investment application (Wealthtech); Utilized in helping the users achieve their financial goal (financial freedom). Personal Finance platform plays an essential role in this because it can perform several tasks at once, such as: providing the analysis of investment capabilities, providing an overview of return of investment projection, as well as assisting the asset management of different investment instruments.
  • Lending Service; In addition to the final consumer, a Personal Finance dashboard can also be used by the lending business owners to get a financial insight about their prospective customers. The presence of this dashboard will help the analyst determine the creditworthiness of a person and make sure they have the resources to repay the installment agreed upon.

An overview of a person’s financial condition can be displayed on the Personal Finance platform. So that various types of financial products — especially digital-based can apply this service as one of the value-added values provided for its users.

How Personal Finance Services Work

The process of the Personal Finance platform consists of 4 main phases:

  1. Data Collection; this process can be done manually by asking the user to enter their financial data. In addition, the data collection can also be done automatically by integrating the system into the service of the financial/payment/banks used by the users. The data will be collected, standardized, and put in a database that is secure with encryption systems.
  2. Data Analysis; from the data successfully saved, the system will perform an analysis of the financial condition of the users. The latest technology utilizes artificial intelligence (AI) and machine learning (ML) to automate the process, making it faster and more accurate.
  3. Data Visualization; the analyzed data will be extracted and visualized based on their individual needs. In this phase, an insight will be provided visually to be easily read and understood by users — instead of just looking at a table of data that tends to be more complex.
  4. Integration (if needed); the Open Finance service allows the Personal Finance data to be integrated into other systems that are later used as features or additional services. The integration mechanism uses an Application Programming Interface that is safe and connected to the back-end application.

Open Finance Technology for Personal Finance

Previously, when you wanted to bring the feature of Personal Finance, a developer of an application had to develop the dashboard independently. Or, when aggregation was required for various financial accounts, the back-end of the application should be connected to many services through a lot of APIs. Sometimes, the process was time-consuming and needed big investment because it required the process of negotiation, design, and reporting of the related cooperation that applied.

Therefore, Finantier presents the Open Finance Technology, which provides ready-made infrastructures: Personal Finance. This technology can reduce the manual stages (when developing independently) by offering a “ready-to-use” service-based platform.

Developers only need to connect the application with one API to get the required capabilities for Personal Finance. In addition to saving time, this will also provide efficiencies in the business processes.

To provide a better overview, the following is the scheme of Open Finance technology implementation for a Personal Finance use case:

Open Finance technology implementation

With Open Finance, the presented Personal Finance service is expected to be more reliable with improvements, such as:

  • Presenting Personalized Report; Each user has unique requirements upon their financial condition. Personal Finance Service empowered by Open Finance will provide a reporting system that is adjusted to each user. By doing so, the user will be categorized by combining data from many sources of financial data that were previously not widely used.
  • Real-Time Data Update; The process of aggregation, connection, update, and delivery of data is carried out continuously through the reliable server infrastructure owned by the Open Finance service provider. Finantier provides an SLA of 99.9% for the system. So, we’re assured that Personal Finance can be relied upon at any time without distraction.
  • Eye-catching Interface; Users like a simple report to apply the modern User Interface and User Experience. The Personal Finance use case with Finantier technology is wrapped with a beautiful look, without friction, and easy to understand.

Increasing Financial Literacy with Open Finance

A better understanding of the personal financial condition becomes one of the important indications of the financial literacy index, because the concern about good financial knowledge indeed starts with ourselves. By knowing whether their financial condition is healthy or not, the public will tend to find a better solution to fix their financial problems, whether related to management, financial goals, loans, or others.

The mission of Finantier is to be a part of financial inclusion, especially in serving both the unbanked and underserved groups. The technological product presented is oriented to help the actors in the financial ecosystem reach these people with ease. The expansion is also expected to add value for the business, related to the growth of the market share.

For the Personal Finance service itself, the features provided by the Open Finance product ecosystem allow the unbanked and underserved groups to get a comprehensive report of their financial condition. The data aggregation system of Finantier is attached to more than just the source from formal institutions (banking data) because many people don’t have access to a bank account. Alternatively, Open Finance has helped to take the data from the non-formal financial service sources, including even transactional applications that were previously considered to have no value for financial reporting (such as the transaction history of PPOB payment).

Hopefully, with the application of Open Finance technology, everyone deserves to improve their financial condition. This data can be used for personal benefit and support access to extensive financial products.

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