May 31, 2021: Open Banking KYC w/ Plaid

Written by Dragos Cocosila

We have a lot to share this week as part of our passion to continue providing you with industry-leading information on the global Open Banking segment. This update will have the weekly additions to the Open Banking Tracker (Banks, APIs, TPPs, etc.), a look at how Open Banking is making it easier to finish the KYC process with financial services providers.

KYC2

Our Current Coverage

  • • We track 2,856 banks providing Open Banking services! (+8 from last week!)

  • • 1,024 APIs currently tracked on our platform!

  • • 440 TPPs in the ecosystem!

  • • 87 Global markets covered!

  • • 35+ Open Banking API Aggregators!

  • • PSD2 API & PSD2 Open Banking coverage!

  • • Track over 60+ data points for all Open Banking projects!

And we are growing on a continuous basis... 🚀🚀🚀

Developments (May 25th to May 31st):

We initiated coverage and provided Open Banking API information for:

  • Banca Akros: an Italian bank based in Milan, Italy and it is a subsidiary of Italian Banco BPM bank.

  • Banca Aletti: offers a comprehensive range of financial services that span from investment banking services to investment management and private banking.

  • Banca Alpi Marittime: is located in Carru', Cuneo, Italy and is part of the Banks & Credit Unions Industry.

  • Heritage Bank Nigeria: is a large financial services provider in Nigeria. Currently licensed as a National Bank, it offers banking and financial services in the country.

  • Providus Bank: is a Nigerian financial services provider, licensed as a commercial bank, by the Central Bank of Nigeria, the central bank, and the national banking regulator.

  • • Biggest Publicly Available TPP Registry in the Industry! 🚀🚀🚀

  • • And many more!

We continue to cover over 35 aggregators!


Open Banking Use Case Spotlight: KYC w/ Plaid

In the financial services industry, the Know Your Client (KYC) step is paramount to the safe operation of any business that deals with client’s money. KYC is where the company learns the essential facts about who the client in front of them is (legal name, date of birth, address, social security number). Still, it can involve forms that span many pages asking about the assets they hold and even asking about associations to foreign government officials. What dictates the complexity of a KYC process is the services offered by the company and the country in which they operate. For example, opening a new brokerage account with access to day trading in the United States is a tedious form to fill out because of the many details needed to prevent things like money laundering and understand foreign ownership concerns with an investment.

While necessary to ensure a robust financial system, this stringent risk management leads to cumbersome onboarding processes that are abandoned at ever-increasing rates by customers. In a study conducted by Signicat, they found that up to 63% of European consumers have abandoned an onboarding process during 2020 alone. A 23% increase over the prior year, generating an estimated loss of over €5 billion per year to the financial services industry. They quote John Devlin, founder of P.A.ID Strategies, that “consumers will simply abandon processes that they see as too challenging, problematic or intrusive. Without dealing with this last hurdle in customer acquisition, the financial services market is squandering billions every year.” Therefore, the solution must be to simplify the KYC process to reduce the number of abandoned account openings, and companies like Plaid are using Open Banking to do just that.

The fact is that at some point when a user opens their first bank account, they have to go through the cumbersome KYC process. Of course, all their data gets recorded within that first financial service provider, and with Open Banking giving users the rights to their data, they shouldn’t have to go through this more than once. By implementing Plaid’s API, the new company where the user is making their account can simply request to pull the same basic information about the client, with the client's consent, from their original bank and fill out the KYC at the second company. Any necessary additional information will still need to be collected, but the onboarding process is streamlined by copying the basics from the original account. There is the added benefit of reducing the possibility of making fat-finger errors, further improving the user onboarding experience, getting them to enjoy a platform more quickly.

The takeaway:

Using Open Banking to improve the clients' first interaction with a new company won’t just make users' lives easier. It is an opportunity to stand out from other similar platforms and be stickier to their new customers. We like how giving consumers the rights to their data is shaking up the financial services playing field and are excited to see what other cumbersome processes can be automated by freer-flowing data.


Feedback

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Have a great week and stay safe!

The Banq team

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