Why PFM and open banking are a perfect match
By Tilen Chetty, Product Lead at TrueLayer
After two years of economic and social upheaval, financial fitness is now a high priority for Australians and powering the rise of personal financial management (PFM) tools.It’s part of a much bigger change within retail banking. Neobanks and PFM platforms aim to bring much more value to consumers than the average mobile banking app by leveraging personal data to provide customised experiences and relevant insights. Open banking will supercharge these efforts. What does this mean in practice? For a customer, it means a complete picture of their financial health, tailored advice to help them along their financial journey, and great tools to help them better manage their money. For a provider, it offers opportunities to leverage huge volumes of data for the benefit of their customers.With more than 80% of Australians preferring to bank online, and consumer data becoming one of the biggest prizes in Australia’s competitive banking space, the opportunity is growing for PFM apps that can exercise the power of open banking early.
PFM is open banking’s perfect use case
A key PFM use case for open banking is account aggregation: instead of the consumer having to keep track of money in different bank accounts, open banking can aggregate them into one PFM app to provide a single, holistic view.This is because the Consumer Data Right (CDR) allows consumers to safely share their banking data with accredited fintech organisations, which can then be used to drive data-driven, real-time insights for the customer. Consumers can be certain their data is protected from being used for any other purpose than the one they’ve agreed to, and PFM providers can harness the power of the CDR to create products that they claim can manage money smarter than a bank.The alternative to the secure open banking environment is screen scraping, a process that asks a consumer to hand over their banking login password. It offers no oversight over how their financial data is used, where it is kept, or even what information is being used. That higher level of security is just one of the reasons why PFM is one of the key open banking use cases in the UK and Europe, where TrueLayer is one of the established API providers. We expect to see a similarly strong response in Australia where demand from consumers for PFM apps is accelerating.In Australia, PFM providers can become a CDR Representative of TrueLayer. That allows them to quickly access the CDR ecosystem of over 100 banks, instantly tapping into multiple years of transaction history and transforming the onboarding process from onerous to automated. To find out more about how to become a CDR Representative of TrueLayer, read our guide here.
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Source: Why PFM and open banking are a perfect match | TrueLayer