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Open Banking Needs Regulatory Nod to Boost Real-Time Payments
Open banking and instant payments are two of the most exciting trends in digital banking today. Both of these services improve the financial lifestyles of consumers and businesses. While instant payments’ benefits for end users are obvious, open banking is slightly more esoteric. Open banking helps technology providers directly connect with user banks, improving their experiences. It does so by using open application programming interfaces (APIs) that enable third-party developers to build applications and services around financial institutions (FIs).
Leveraging financial APIs via open banking could unlock the next step in instant payments’ evolution. It allows real-time payment providers to interface with any customer bank and offers real-time transactions directly from accounts. Although just one-quarter of banking APIs are publicly accessible, banks are increasing API access to nearly 50% in the next three years.