How Businesses and Consumers Can Save Money via Open Banking

In a report by Yapily, significant savings on card network fees were touted as a huge financial advantage for UK-based businesses. In one month at least 1.6 billion debit and credit card transactions are made which amount to approximately £57.5bn in expenditure. If there’s 1% fee on each transaction then this means that £575m is going to the card providers which can be reduced significantly using open banking. The report analysed ecommerce, travel and financial services but the same is probably true for other market sectors as well. This direct cost saving is not the only way that companies can help their bottom line. By utilising real-time data they can also offer services to their customers that are more relevant and beneficial which encourages loyalty and generates more revenue in the long term.

On the customer side a recent report found that people with limited access to financial services could save 0.8 percent of their salary by using open banking and those that are in a lot of debt could save 2.5 percent. Open banking also makes it easier for customers to manage their budgets, consolidate loans and make financial plans for the future. In emerging markets, consumers now have the opportunity to make automatic savings via innovative open banking apps based on their financial history, which creates a buffer they wouldn’t ordinarily have. 

They may also be able to save money on utility bills by using open banking apps which help them to find the best deals based on their patterns of consumption. This also adds a new element to the competitive landscape, forcing utility companies in emerging economies to offer better rates and better service to consumers. A lack of paperwork is often a problem for low income individuals in emerging economies, either preventing them from accessing financial services or increasing the costs of doing so. The data sharing behind open banking could help them to overcome this obstacle. By cutting out the intermediary, open banking offers faster payments and reduced fees. However, the data sharing aspect is also extremely beneficial from a financial perspective for both businesses and individuals. It opens up a whole new world of automation and competition that will drive the market forward.