Why Fintechs should embrace Open Finance
Open Finance enables fintechs to understand the financial behaviour of their users, allowing them to create personalised products that increase retention.04 March 2021 • 4 min read
Offer an engaging user experience by creating a stress-free onboarding process. Build hyper-personalised products that customers love.
Welcome to the future of financial services, where Open Finance makes the above possible.
Led by the drive towards an open ecosystem where financial companies can securely exchange the data of their customers with one another, Open Finance enables fintechs to build user-centric financial services - a far-fetched term a few years ago.
Driven by the widespread adoption of the Payments Service Directive (PSD2), financial institutions in Europe are exchanging financial data (such as customer and transaction information) with other companies through a common API gateway.
This has enabled fintech companies to obtain clearer insights into the digital financial profiles of users, allowing them to build personalised and user-friendly products that rival traditional financial institutions.
Similarly, Australian regulators have spearheaded the push for Open Finance by mandating financial institutions to exchange the data they had previously held in silos.
Closer to home, the Indonesian financial services authority (OJK) has encouraged the push towards an Open Finance ecosystem with the release of its 2025 Indonesia Payment System Blueprint.
Intending to drive financial inclusion for the 139 million unbanked within the archipelago, OJK is implementing an Open API framework to connect fintech companies with incumbent financial institutions such as banks.
The future of finance is open
What does this mean for the thousands of fintech companies across Southeast Asia?
By having access to the digital financial profile of the banked and unbanked, Open Finance enables fintechs to gain access to a wider range of customers than ever before.
Besides increasing revenue, these companies can leverage exchanged financial data to gain deeper insights into the financial behaviour of their customers.
By understanding their users on a deeper level, they can profile their customer base accurately and focus on customers that truly affect their bottom line.
For instance, a lending company can analyse the financial data of its customers and choose to only extend loans to those who have a credible income history and high credit score.
Besides reducing default rates, these lending companies can divert resources previously utilised to recover bad debts into acquiring customers that have less likelihood of defaulting instead, fuelling a growth in profits while reducing losses.
Besides, Open Finance brings an increased element of security to financial services.
With secured and regulated APIs facilitating the open exchange of financial data, Open Finance would make it nearly impossible for an individual to modify their online financial statements or payrolls.
By allowing fintechs to easily embed eKYC processes into their products, Open Finance enables companies to verify the identities and financial histories of their customers without the need to submit physical documents.
Besides providing a better user experience, the tamper-proof verification process decreases the possibility of fraud.
Consumers will welcome Open Finance
As consumers today place increased importance on convenience and accessibility, it is paramount that fintech companies create user-centric products.
With Open Finance facilitating the exchange of a user’s financial data across different platforms, fintech companies can enable users to auto-fill verification forms, eliminating the hassle of onboarding and reducing the rate of drop-offs during signups.
Furthermore, companies can analyse the financial data from other platforms to create a holistic view of a user’s digital footprint and leverage it to create personalised products.
For instance, a personal finance management platform can analyse the spending history of an individual across different e-commerce platforms before recommending appropriate budgeting plans.
Compared to generalised offerings by large financial institutions, personalised fintech products will increase customer satisfaction and improve retention rates for fintech companies.
With a high internet penetration rate and a united push towards Open Finance, digital financial services within Southeast Asia are primed for exponential growth. This has created a burgeoning opportunity for regional fintech companies.
The gross transaction volume for payments, lending and investment is expected to reach $1 trillion, $110 billion and $75 billion respectively by 2025.
This growth, while welcomed, brings a new set of challenges for financial companies. How can they benefit from the huge increase in financial data, while staying focused on building their products?
This is where we come into play.
Finantier does the hard, but crucial work of aggregating data from a wide range of financial platforms.
We clean the data before packaging them into actionable insights for fintech companies.
We allow fintechs to focus on what truly matters - building personalised products that their customers love.
As developers ourselves, we truly understand the pain of poorly created APIs. Hence, our APIs are created with the needs of developers in mind, allowing our services to be easily embedded within hours.
Besides helping a growing community of fintech companies build the future of financial services, we are looking for talented and driven individuals to join our diverse team.
Hailing from across Southeast Asia, our teammates are some of the brightest (and funniest) people we know! They always find a way to have fun while building products that are defining the future of fintech.
If you have read till the end, you must be incredibly interested in what we do.
Join us today in helping the 290 million unbanked in Southeast Asia unlock access to the financial services they need.