Adam Lieberman, head of artificial intelligence and machine learning at Finastra.
Open Finance refers to the overarching concept of using technology and APIs to grant financial services businesses and customers greater ownership and control of their financial data. Open Finance helps users access a wider range of financial services, make more informed decisions and enjoy personalized experiences. It is transforming this sector—and technology leaders should take note.
Building on the principles of Open Banking, Open Finance empowers people and promotes inclusivity. From accessibility to personalization, Open Finance has the potential to enable new financial ecosystems, drive more sustainable decision-making and support positive societal change.
Open Finance breaks down silos between different sectors and platforms and represents an unprecedented opportunity for all industries—especially in the context of the rise of artificial intelligence (AI) and machine learning.
Best Open Finance Practices For Tech Leaders
Data is of utmost importance to building high-performing AI-driven systems. Think of it this way: If AI is the beautiful flower that we see, then data is the soil in which it grows. As tech leaders, we should leverage data with AI, allowing us to access insights that enhance the financial ecosystem. By following these strategies, you can maximize the benefits of Open Finance in a myriad of ways. For example, you could:
Implement data-driven insights for a more personalized experience. The data available through Open Finance enables businesses and financial institutions to gain deep insights into customer behavior. This allows companies to understand customer needs and target marketing efforts accordingly. In addition, AI enables financial institutions to better analyze the large volumes of data made available through Open Finance initiatives. This allows for more personalized services, improved risk assessment and data-driven decision-making. Today’s consumers expect a more seamless, digital user experience from their financial institutions, and Open Finance can enable financial institutions to deliver for these changing needs and expand or embed services within the context of the entire customer journey.
Consider a strategic plan to launch spin-off businesses. Open Finance can be critical as banks and credit unions consider new spin-off businesses and ventures in a competitive market. Open and collaborative solutions enable financial institutions to quickly create innovative programs and brand extensions that meet the needs of the communities they serve. An open ecosystem also enables institutions to embed their services in the journeys of others, or integrate others’ capabilities into theirs, which fuels the growth of the entire ecosystem.
Activate access that drives innovation. Open Finance can enable secure API access to high-quality data sets, which drives more rapid innovation. This is because, to revisit our flower analogy, there is no need to waste time enriching the soil. AI and generative AI can also assist in understanding the impact of various scenarios, such as external market influences, financial forecasting or geopolitical shocks. With high-quality data easily accessible, organizations can easily build solutions on top of it—spurring the creation of new products, services and business models and fostering sustained innovation in the financial sector.
Considerations In An Open Finance Ecosystem
Of course, in an open ecosystem, there are many considerations for today’s business and technical leaders. While none of these will be new considerations, they are just as important within an open environment as they are within an organization’s walls. For example, ensuring the integrity and accuracy of data is critical for reliable decision-making and operational efficiency. Accessing high-quality data sets is essential.
At my organization, we are harnessing Open Finance to address industry challenges, making financial services more accessible for everyone. By integrating advanced AI and machine learning technologies, we, just as other tech leaders can, are driving business growth and cultivating new financial ecosystems. With access to high-quality data, we can build high-performance AI models and deliver significant impact and innovation to the world of Open Finance.
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