From FinTech to Open Banking: Data-Driven Banking to Unleash the Power Embedded in Data

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Digitalization – a necessary premise, let us repeat, of data-driven banking – has given an extraordinary boost to the innovation of traditional financial services , for example by simplifying access methods and streamlining or speeding up operations such as opening a bank account, requesting a loan or payment transactions. This small revolution, which has had an impact on the revenues and relevance of many traditional providers, has also produced an important effect of social inclusiveness: it has made it possible to reach targets that until then had been neglected or excluded .

From FinTech to Open Banking: Data-Driven Banking to Unleash the Power Embedded in Data
While on the one hand FinTechs enter the market without the burden of italy whatsapp resource legacy systems and are able to immediately use advanced technologies such as cloud, AI and ML to their full potential, on the other hand they have to deal with some structural limitations: they cannot rely on domain knowledge and do not have the historical data necessary to provide in-depth and precise analyses. To resolve this conflict, which seemed irremediable, the approach to data of the entire banking sector was profoundly redesigned in 2019 following the introduction of the Payment Services Directive 2.

The PSD2 directive required all European banks to "open" their APIs to other players in the sector (APIs are Application Programming Interfaces , the intermediary software that allows two applications to talk to each other), effectively marking the birth of Open Banking , the production structure in which the various players in the banking ecosystem share data flows with each other .