Open banking uses technology to empower better and secure relationships between customers and service providers
‘Open banking’, a practice that provides third-party financial service providers open access to consumer banking, transaction, and other financial data from banks and NBFC’s through the use of Application Programming Interfaces (APIs), has been rapidly catching up and is said to be the future of financial technology. While this has several benefits, the innovation is also a high-risk practice as it involves sharing and trading a vast amount of data. And while financial technology, over the past few years, seen tremendous growth in India, the Covid pandemic has facilitated a huge surge. Online transactions worth Rs 4.3 lakh crore were reportedly carried out on UPI in January 2021, Vs. Rs 2.1 lakh crore in January 2020, highlighting the urgent need for building a robust open banking system with set data security protocols.
Policy interventions:
As per a recent report, The Reserve Bank of India has announced a new set of guidelines for the digital banking and payments ecosystem, which requires regulated entities (REs)—scheduled commercial banks, small…
