Did you know that there are as many as 5,711 bank branches currently operational in Canada alone? It can be hard to imagine a world without banks, but what you might not know is that there are very unique ways in which you can bank. In particular, open banking is a practice that has become quite popular in recent years, but how does it work?
How is open banking any different than regular banking? More importantly, what are the benefits of using this kind of banking strategy? Keep reading and learn more about the details below.
What You Need to Know About Open Banking in Canada
Open banking is currently more popular than it ever has been before. Understanding open banking can be a bit difficult at first, especially since different regions have different definitions of how it should work. However, once you start to understand the basics, you will find that the rest of the information will come quite naturally to you and you will start to see its many benefits as well.
The first thing you should know about open banking with Canadian banks is that it involves a lot of financial data. After all, every bank has a slew of financial data for all the people it serves. Open banks may be led by a variety of powers.
In some cases, the government may be in charge. In other cases, an industry may be in charge. The result usually depends on the region you are in.
Whatever the case, open banking is unique because it puts financial information in the hands of the consumers. This gives the consumers the opportunity to control this financial data, which is usually something that they are not often able to do. From that point, the consumers in question will be able to do a variety of things with all this data.
They could even share it in certain ways if they wanted to. This is known as user-permitted data sharing. You might be wondering what the point of this data sharing is.
After all, doesn’t it seem more like a liability rather than a benefit? Not necessarily. Open banking in Canada can be beneficial in a variety of ways mainly because it can make certain financial duties much easier and more convenient.
For example, suppose that you want to get a loan for an expensive new car. However, in order to get this loan in the first place, the lending company will want some financial information from you such as your bank statement to make sure that you’re a good choice as a borrower.
Normally, it could be a pain and an inconvenience to go and find all the right documents to give to your lending company.
But with open banking, you won’t have to worry about a thing. Instead, with the power of user-permitted data sharing, you can immediately share this financial information of yours so that you can continue with whatever financial task you were trying to get done.
But won’t this make your financial information more at risk of being stolen? Not at all. This is because your data will be shared only when you allow it to be.
Besides that, when your data is finally shared, it will only travel through very secure channels. That way, it will be very difficult and sometimes even impossible for potential hackers to get to your information. So, you won’t need to worry about a thing when sharing this information for certain purposes.
Of course, you need to be sure that whenever you share this information, you need to share it with a reputable company. As long as you do that, you’ll be in the clear.
What Are the Benefits of Open Banking?
Some people who have never tried open banking with Canada banks or lending companies may be wary of trying it out. They may think it is dangerous or unreliable. However, in reality, open banking is far more beneficial and reliable than you could ever imagine.
It all works in a very clean and clear way so that you should never run into any problems when open banking. One of the main benefits of banking in this manner is that it allows you to move tedious, manual tasks to the digital realm. This may not be very surprising to you since more tasks and operations are starting to move into the digital space.
This is simply because the digital world allows these tasks to be performed in a much simpler and more efficient way. For example, instead of rummaging through a bunch of old bank paperwork and financial statements, all of this information will automatically be online.
That way, whenever you need these statements to get a loan, mortgage, or anything else, you won’t have to stress yourself out by trying to find all the right paperwork.
What You Need to Know
Instead, you can just go on your computer or phone and share your financial information with a particular organization using user-permitted data sharing. Besides bank statements and similar information, you can also store and share other important information such as pay stubs, old applications, and more.
As you can imagine, this can be helpful to you in a variety of ways, whether you are dealing with personal financial information, business information, or anything else for that matter.
Another benefit of open banking is that it makes it very easy for a consumer to keep track of a variety of financial information. This includes money that the consumer spends or earns. Besides that, open banking also makes it easy for a consumer to interact with financial or banking apps.
Instead of having to find a bunch of different information in different places, open banking will make it so all your most important information is already at your fingertips. As a result, this can save you many minutes or even hours of your time and you can focus on whatever financial task you may have at hand.
Is Open Banking Right for You?
After reading about all the benefits that open banking has to offer, you might still be wondering whether this type of banking is the right choice for you. After all, you might already be very accustomed to the more traditional approach to banking. Is it really worth getting mixed up with all of this digital stuff?
The thing is that more people (as well as businesses and other institutions) are starting to get involved with open banking. As a result, open banking is slowly starting to become your regular, everyday type of banking. On the other hand, the more manual banking you may already be used to will soon become obsolete and, at a certain point, it may no longer even be accepted.
This is the simple nature of digitalization and how technology changes with the times. Those who ignore the benefits of open banking may be left behind and may also experience many more inconveniences than necessary. On the other hand, those who switch to open banking will find themselves ahead of the game.
What to Know
After all, who really wants to rely on physical documents and manual tasks? Even though it might seem complicated to jump into open banking right away, as soon as you start, you’ll soon figure it out and find that it is far simpler and easier than traditional banking.
It is also an extremely safe form of banking. After all, open banking usually comes with a variety of security measures that make it very hard for hackers to ever even catch a glimpse of your important information.
At the same time, these security measures won’t get in the way of your banking, so you won’t have to worry about wasting several minutes verifying your identity just to get your bank information.
Instead, everything in the realm of open banking is as streamlined as it can possibly be. That way, you won’t have to worry about wasting time, and instead, you can focus more on important things like managing your finances and sorting out loans, mortgages, and other financial tasks.
All About Open Banking in Canada
Open banking in Canada can seem daunting to those who don’t know anything about it, but it really isn’t all that complicated. It is simply a way in which consumers can digitalize their financial information and share it in a safe method known as user-permitted data sharing.
To learn more about banking and finances, book a demo here.