Banks are the custodians of accounts, and in the past, have historically prevented customers from accessing their financial information through third parties. Open finance democratizes access to financial information, which allows customers to govern their own financial data.
Open finance effectively began a revolution in the financial system, allowing businesses and developers to create innovative services and solutions, building on the proprietary information held by banks.
Even though some use cases already exist, we are still only at the start of the revolution. The first applications of open finance centered on lending, but we are now seeing a broader set of use cases like personal finance, insurance, payments and more.
In this article, we will explore some of these use cases and how Okra can help:
Open Finance Use Cases
Most applications must have a Know Your Customer (KYC) process. KYC procedures are required anywhere money is involved, either by legislation or by the firm itself, to prevent fraud and enhance trust and safety. Rather than in-person verification that involves manual processes, it is vital and more cost and time effective to verify a user's or organization's identity online.
This is particularly true in a world where consumers want instant gratification. Hence, the ability to enroll fast is critical! How quickly can customers download your app, give you access to their information, and become active users? That's a question every business owner that uses KYC needs to answer. When it comes to retrieving and verifying a person's or business's identity, companies can integrate a KYC/B feature into their apps with ease using Okra Identity. This product gives your customers the opportunity to onboard in a matter of seconds, decreases user churn, and makes KYC processes easy for African enterprises.
Personal finance apps give customers a thorough picture of their financial health. These apps are able to do things like categorizing transactions, identifying financial patterns, and even making recommendations to improve financial health.
With the infinite possibilities of open finance, companies are able to build personalized finance management experiences for each user and use real-time data insights to provide budgeting and planning services. Companies in this space can utilize Okra’s Income, Balance, and Transactions products to get valuable financial data that can power personal finance apps.
In the past decade, getting insurance was a time-consuming and challenging process, deterring many people from obtaining coverage. In addition, the need for a lengthy manual process and lots of paperwork made the experience very stressful for everyone involved.
Fast forward to now, the insurance sector has gone through a considerable transformation over the last decade, closely following the digitization of the financial market. With all the necessary information readily available online, finding, applying for, and obtaining insurance has never been easier. Thanks to open finance, companies can utilize products like Okra Income and Spending Patterns to evaluate customers across various financial dimensions to optimize performance, prevent fraud, and make smarter coverage decisions.
Before the emergence of open finance, debt collectors faced numerous challenges such as getting paid on time, lack of financial data about their customers, low repayment rates, and many more.
The traditional process for debt collection involves lenders tokenizing the customer's debit card data during onboarding. This allows the lender to charge the card with the appropriate amount at certain intervals.
This method is expensive due to card fees, and it works only if the borrower has sufficient money in their account to pay on time. However, when the repayment request fails due to insufficient funds on the borrower's account, the repayment process then requires human intervention.
With sophisticated open finance products like Okra Income, Transactions, Balance, Complete View, and Payments, debt collectors can institute processes that result in swift repayments and increase their overall recovery rate.
Credit risk assessment
Through open finance, lending companies can have real-time access to the complete overview of an applicant's credit history (with customer consent), a catalyst for faster loan application processes. Previously, loan applicants were required to submit many documents oftentimes from different banks before they could obtain a loan. With the real-time financial data of potential customers, lending companies can make faster and smarter choices and utilize products like Okra Complete View, Income, and Spending Patterns to thoroughly assess credit risk.
Open finance generates greater diversity in the financial system by giving businesses and their end customers more freedom. Okra’s plug-and-play open finance products give businesses access to high-quality financial data, which is vital for building great financial services and products. Interested in seeing what you can build with Okra? Visit our website to see all the services that we provide.