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5 open banking use cases beyond banks and fintechs

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Last editedMay 20233 min read

If correctly implemented, open banking initiatives could save UK consumers £18 billion in value, mostly with the help of finance management tools. Here are 5 less-obvious open banking use-cases that are either in planning/development stage or haven't been built yet. 

Travelling without a passport

Anyone who has ever travelled abroad is all too familiar with the long cues for passport checks. But not for much longer. 

The World Economic Forum is already testing a new initiative called the Known Traveller Digital Identity (KTDI) programme, which would allow passengers to fly between international destinations document-free. Passengers participating in the pilot project would be using their mobile phones to verify their identity, instead of a passport. 

The UK government is likewise tackling this issue by issuing “a call for comments on the development of digital identities, including the role of the government and the private sector”. 

Both initiatives highlight the importance of private sector initiatives. The WEF report summary outlines that trustful cooperation “between international public and private sector partners” is one of the key factors “required for ensuring the safe and secure movement of people across borders.” 

Private companies tackling this issue can use open banking as one of the pillars of travel identity verification. Opening and operating a bank account requires the same type of documentation required for travel. Open APIs can help digital identity providers access customer identities via their banking platform securely and quickly. 

Forming financial habits

Financial service providers using open banking are already helping consumers turn their financial behaviours into habits.

Revolut, for example, offers users a categorised view of all their spendings. And while the insights alone don't necessarily contribute to forming better habits, they're a useful tool nonetheless. 

Innovative service providers can use consumer transaction data to offer apps aimed at establishing new, healthier habits. One app that does this already is Spendee - the money manager and budget planner helps users control their wallets and expenses, see a comprehensive overview of their spendings, and save money by creating — and sticking to — a budget. 

Research shows that it takes individuals anywhere from 18 to 254 days to create new habits. Financial services using open banking can help consumers along on this journey by providing quick and easy on-boarding, well-designed user experience and reliable platforms. 

Apart from budget control, open banking-powered apps can also assist consumers with creating financial investment, insurance and retirement habits. 

Finding the perfect flat 

Price, location and infrastructure are amongst the most important criteria when looking for a flat. Real estate companies with vast databases can charge hefty commissions, so individuals often look for housing options on local ad-powered platforms, social media and social community platforms. 

Open banking enabled apps could help regulated service providers suggest consumers the best possible flat options in selected areas based on their actual spending preferences. Shopping at Walmart or Tesco? The ideal flat should have one of those nearby. Spending on transportation? An app could help identify an area with the best bus connections.

Consumer transaction data reveals exactly what they require to sustain their lifestyles — from restaurants, shops, transportation, daycare, schools, medical facilities, and more. 

Services using open banking could even utilise consumer account data to help them predict their future needs, such as a school for their newborn daughter.

Meeting consumer life cycle needs 

Accurately categorised transaction data can reveal a multitude of information about a consumer's life cycle. A student loan indicates that they're most likely a student, a mortgage points out that they're assumedly a homeowner, and kindergarten payments are a clear sign of parenthood. 

Open banking enabled account data can help marketers better understand and serve their customers, offering them products and services that are immediately relevant and even needed. 

Digital ads tend to be ignored. Data shows that “users have learned to ignore content that resembles ads, is close to ads, or appears in locations traditionally dedicated to ads.”  Open banking can help digital marketers improve their targeting and decrease consumer exposure to irrelevant ads.

Account data can also be used for predicting the next consumer life cycle based on their historical information.

It's clear that after applying for a student loan, students will need affordable housing and insurance. It's likely that a mortgage payment will be followed by renovation expenses and new furniture. A new parent will be searching for excellent daycare and baby products in their area. 

Open banking helps service providers understand, predict, and tackle the needs of their potential customers even before they materialise. 

Enabling wage transparency

Another non-obvious use-case that open banking could help address is wage transparency. Whether tackling wage inequality, employee rights or simply asking for a promotion, account data can provide working professionals with the insights they require to thrive in the global workforce. 

Imagine an app that could aggregate the average salaries of professionals operating within the same field. Companies go to great lengths to conceal their employee salaries, but data indicates this to be counterproductive. 

INSEAD research, examining wage statistics in Danish companies, revealed that the disclosure of wage statistics showing the difference in gender compensation actually helped reduce the pay gap by 7 percent.

Open banking powered apps comparing wages could likewise support employees seeking promotions — data revealing how much workers in the same field earn could be the most powerful tool for salary negotiations. This would help promote fair pay and sustainable labour migration. 

Open banking has a multitude of use cases. Some, like a digital passport, are already underway, whilst others are still in their early stages. By leveraging secure account data sharing between licensed service providers, companies using open banking can truly help improve their consumer life quality.

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