Key Benefits of Embracing Open Banking and Real-Time Payments

The Jack Henry™ 2024 Strategy Benchmark dives into three hot topics surrounding open banking and real-time payments over the next two years.

Considering the Risks and Rewards

When it comes to open banking, many financial institutions say they still feel the risks associated with adoption outweigh the potential benefits – often pointing to the risk of increased fraud as an ongoing hurdle to their adoption.

In sharp contrast, most banks and credit unions feel confident in their ability to secure real-time payments, with a slight decrease in this confidence among smaller financial institutions. Although faster payments offer the distinct challenge of faster fraud, banks and credit unions say they’re much less concerned about adopting real-time payments versus open banking tools.

Obtaining More Powerful Data

The disconnect between the confidence of many banks and credit unions in combating real-time payments fraud and their confidence in embracing open banking highlights a strategic gap and significant blind spot.

To effectively fight real-time fraud, you must bring as much data to bear as possible.

The adoption of open banking provides a much broader set of data that can be used to train and tune the machine learning (ML) and AI solutions required to fight fraud successfully. This is especially true for smaller financial institutions with much less proprietary payments and meta-behavioral data to leverage than their larger counterparts.

Study Results: How to Find Fintech Partners

• Bank and credit union CEOs rely on a mix of resources when scouting fintech providers, such as peer referrals, industry associations, independent research, and core providers.
• 72% of financial institutions say they find fintech partners through peer referrals, while 61% say they tap into industry associations or trade groups, and 59% say they do their own, independent research.

Enhancing Fraud Mitigation and Growth

Banks and credit unions that adopt real-time payments and avoid open banking will simultaneously limit the broader data open banking makes available to better identify and mitigate real-time fraud consistently.

Embracing both real-time payments and open banking strategies extends even further when you consider how they enable innovation with faster, more personalized services and banking tools – precisely what your accountholders crave and what can drive growth for your financial institution.

Create limitless possibilities

Compete more effectively, create successful open banking strategies, and discover the power of cutting-edge banking technology with valuable insights from the 2024 Strategy Benchmark.

Ready to learn more? Connect with a Jack Henry expert today!