Account Information Services (AIS) refers to the tool for businesses that helps them share their data with financial providers, third-party providers, and banks. But, what role exactly does Account Information Services play in the FinTech industry?
The FinTech industry is rapidly growing. 64% of consumers worldwide used one or more fintech platforms in 2021. Financial Technologies is a digital force that has reshaped the entire industry.
More than 26,000 fintech companies operate globally, offering various services to customers. This framework has revolutionised several industries in the financial sector, from payments to consultancy services.
Account Information Services(AIS) play a significant role in this development. It might be the most visible advancements that Open Banking has offered us.
But, what role exactly does Account Information Services play in the FinTech industry?
In order to understand that, first, we need to understand what AIS, what are the use cases of this tool, and who gets the benefit from implementing the system into their solution.
This article will talk in-depth about Account Information Services and discuss new trends in FinTech to clearly understand the role of AIS in this field.
Simply put, Account Information Services (AIS) refers to the tool for businesses that helps them share their data with financial providers, third-party providers, and other banks.
Other than that, it facilitates the verification of new customers and the assessment of their credibility.
Through an AIS relationship, the user will allow an Account Information Services Provider (AISP) access to their data, which can then provide insights into their financial behaviour. For the end-user, it means that their request for a loan can be accepted faster.
AISPs can be used to build better experiences for the customers by accessing the user’s account balance, direct debits, transaction history etc.
The core benefits of AIS are visualised through the digitalisation of various international and local transactions.
Let’s have a closer look at the main benefits of this framework:
Less manual processing
The Digital Account Check improves customer experience by giving banks access to analyzed and aggregated data through AISPs and saving the customer from additional paperwork.
Lower business cost
The customer gains power over their data and no longer needs to send and receive account statements or salary slips for granting a loan. Digitalization also comes with a lower business cost thanks to less manual processing.
AIS improves transparency in the actual financial status of prospective customers of the financial service provider. By gaining access to the prospective customers’ bank balances, the determination of creditworthiness is much faster and more accurate.
Account Information Service providers are not only used by banks and financing companies, but other service providers also take advantage of this framework. The positive impact of AIS can be seen in real estate, cryptocurrency, retail, online casinos etc.
Despite that, primarily the companies that take advantage of benefits offered by AIS are loan providers who do not have a long enough customer history to assess the customer’s credit rating.
Currently, AIS is being used by global international companies such as Check24, Finiata, N26, etc.
Payment Initiation Service Providers (PISPs) are the entities that are able to issue payment instruments to initiate online payments to different businesses or people directly from the payer’s bank account.
The biggest value of PISPs is in the field of online payments. For example, this framework is heavily used in online trading. When a customer purchases something, they can use the Payment Initiation Service to make a transfer instead of using their credit card.
The primary difference between AISPs and PISPs is that AISPs cannot initiate transactions. They have a ‘read-only’ view of the customer’s bank account.
PISPs, on the other hand, trigger payments or transactions on behalf of the customer at the account-holding bank.
For example, AISPs can be used to monitor spending or create budgets. While PISPs can trigger real transactions in an online banking account on their behalf.
The FinTech industry is thriving in every part of the world. The landscape is changing with the light of speed, and we experience these developments every single day as consumers.
Knowing about key trends in FinTech is essential because they impact everything related to finances, payments, and banking. More specifically, pandemics have caused a massive rise of 72% in the use of FinTech apps in Europe.
Let’s have a look at some of the key trends in this industry:
Various mobile banking services have brought banking to our fingertips. But it also raised security concerns regarding cybercrimes through this framework.
One of the most effective security measures against cybercrime is using biometric security systems. This system takes security to the next level and ensures safety and protection.
Biometrics refers to the process of measuring unique physical and biological characteristics to identify a person. The most common options for biometric identification are facial recognition, fingerprint mapping and retina scans.
AI & Machine Learning
Banks worldwide are incorporating AI in their operations. It is expected that AI will reduce more than 20% of banks’ operational expenses by 2030.
They also use it to verify their users and manage cybercrimes by identifying fraudsters. With various verification services available, AI helps the FinTech industry be more secure, seamless, and transparent.
Open banking is another revolutionary technology that connects banks and FinTech solutions by facilitating data networking across different institutions.
Open banking refers to a process of enabling third-party payment services and providers to access consumer banking information, such as transactions, payment history, etc. This process happens through the use of application programming interfaces (APIs).
In one way or another, almost everyone with internet access is using FinTech nowadays. If you interact with a payment platform such as PayPal or Apple Pay, that’s fintech. Other examples include crowdfunding platforms like Patreon and others.
To sum up, Account Information Services helps create the conditions for the use of account information and functions by banks and other financial entities. New FinTech services are based mainly on the Digital Account Check.
Account Information Service Providers have a massive impact on the positive development of the ever-growing FinTech industry. They are the ones who provide an essential component of the infrastructure needed for new apps and services to be created.
Here at TransactionLink, we build a one-stop shop to help you build FinTech solutions. We are the Account Information Service Provider that allows you to confirm your users’ identities and learn their personal information.
We help you confirm that your users have bank accounts and get information on all of their transactions from the past three months. You can later access this data through our API and use it to create your products and services.
Have a look at our AppStore and learn more about the products we offer to fuel innovation and assist in creating innovative solutions in the ever-growing FinTech industry.