4 Tips to Choose Best Open Banking Service Provider

Open banking has ignited a great revolution in the financial industry with its ability to allow customers to take full advantage of their financial data. With open banking since 2021, third parties are permitted access to user's bank accounts, which until 2022 now are exclusively managed by banks. Financial institutions, and all the aspiring super-apps out there, can tap into this data to dream up a new range of services for their customers.

However, the third-party app needs to access the banks’ databases to do this. Fortunately, there are a couple of solid choices of open banking service providers who provide open banking apps and open banking API.

Since there are many of them, it gains doubt among the fintech, as the third party, to choose the best open banking service provider suitable for them. If it is the reason that you are reading these tips, then you need to understand the steps below before engaging with a provider you may think is the best.

Know what you are going to do

Do you know what you will do with the open banking service? Is this really what your company needs currently? Or maybe, you don't even know what it is about? And how the banking system works in the API management platform?

Do not ever agree with any providers before you understand how API application programming interfaces work and how it benefits your company. If you think API-based open banking only provides you with other budgeting and investment or payment points for your customers, then it is wrong since it is more than budgeting apps to manage your recurring payments.

Understand what you are going to do with the open banking implementation system; determine what goals you are trying to achieve with it. Gather your team to define the goals.

Open banking products have two main functions. The first one is a supportive tool to integrate your app into a banking database, enabling your customers to access the payment systems more easily and faster. It will bring new hassle-free features that minimize the cancellation rate on your platform's transactions.

The second is to determine your customers' profiles by tracking their financial data, personal finance, subscription, and spending habits, including their credit score and income. The profile will be your primary data for creating the best offer, such as payment solutions, personal finance management, and many more for your customers, which is more suitable to their necessity.

Check the provider's track records

An open banking service provider must be trustable that provides a solution. To ensure your choice is trustable and provides customers satisfaction, you need to check their background story and account aggregation. Take simple research on their journey and what kind of clients or industries they have served. Study the solutions they offer, and whether it is related to your platform. You can also check if the provider is a member of a legit organization known for its professionalism as open banking companies.

By doing simple research, calculating how much credit you have, and studying everything about the provider, you can assess how they can be trusted as banks and financial institutions. You can also check whether their solutions align with your primary goals, especially for your fintechs company's growth.

Make sure it's regulated

As you take part in using your customers' database, a regulated provider is a must for the banks and financial industry. The reason behind it is that you may give your customers confidential data. It is risky since you are responsible for your customer's data account in one place and manage their money. Thus, it is very reasonable to double-check whether or not the local government regulates the provider.

Ayoconnect is undoubtedly a trustworthy regulated apps as we are regulated by the financial conduct for practicing open banking platform provider since it has been registered with the Ministry of Communication and Information of Indonesia. Its legitimacy is also supported by its membership in Fintech Indonesia and the Indonesian E-commerce Association (idEA). Thus, you don't need to worry if you choose Ayoconnect as your open banking provider for your company.

Ask these questions to your open banking provider

You would like to keep everything transparent and straightforward, especially when you are not sure what the detailed process of the financial services provider is. Hence, it would be best to ask your potential provider some open banking use cases questions to provide you with a clearer understanding.

1. “Can I only use open banking for online payments, or can I also use it for other channels?”

It was initially arranged as an online payment mechanism. However, many merchants expand it into other channels too. Some providers offer QR codes and payment by link as a solution. The feature will enable your customer to pay on multi-channels both online and offline.

2. “How do you connect to each of the banks?”

Back in the day, providers connected to banks using reverse engineering or screen scraping techniques. Those techniques have security risks that are starting to be blocked by most banks.

A reliable provider connects to the banks’ database using PSD2 APIs. If your provider asks customers to ‘sign in’ to use their service, then it is a sign that they are still using screen scraping while saving your customer’s banking credentials on their service. Your customer security is precarious.

3. “How do I know I can rely on you to process my payments 24/7/365?”

One tough question to ask your providers is their ability to maintain a reliable and efficient 24/7/365 service. In other words, they should have multiple data centers for processing the transaction and how they switch across if one is going down.

Also, you need to know that monitoring of the service is help you manage in real-time, including what tools they have to monitor and what alerting and incident notifications are happening in real-time—everything to ensure the best customers experience.

Choosing the best API banking platform is tricky since you need to make sure that the provider is reliable, has multiple solutions, and will give the best experience for your customers. Ayoconnect, the largest open banking solution in Southeast Asia, has proven its track record in establishing integrated open finance for more than 1000 companies in Indonesia. Through API-based technology, Ayoconnect is ready to provide a wide range of financial product and service features for companies faster and hassle-free.

‍