Five ways multibanking is changing banking.

14/12/2022

The introduction of open banking (which you might know as PSD2) in Europe in 2018 kickstarted a digital revolution in how consumers interact with banking services.

While the sensitivity of financial information means traditional banking services require siloed security systems that customers traditionally access through bank-owned branches, websites and apps, open banking has opened the door to a new era of multibanking.

Secure data flows let third parties verify account details, initiate payments and provide enriched analytics within a single interface that connects multiple bank accounts.

So, how is multibanking changing the way customers interact with their money, and why will open banking play such an important role in the development of multibanking solutions?

The digitization of banking has seen a transition from physical bank statements to online banking, but the ability to consolidate and control multiple accounts through a single interface represents a much bigger shift. Multibanking will fundamentally change the customer’s relationship with financial service providers.

A host of third-party providers (TPPs) have developed cutting-edge personal finance management apps, such as Klarna Bank Account, which lets you connect bank accounts, check transactions in real time, set budgets and categorize transactions to track spending.

The ultimate goal of multibanking platforms is to become the go-to destination for customers to manage their funds and interact with their accounts.

As individuals and small businesses continue to harness the power of multibanking and cherry-pick financial products to suit their specific needs, traditional financial service providers must rethink how they build customer loyalty.

Reducing direct engagement between end-customers and financial service providers gives customers a better financial overview and unlocks a host of benefits that can boost customer experiences.

Here are five key benefits of consolidating multiple accounts through a single banking interface:

1. Searchability.
   Retrieving information about a specific transaction, spotting duplicate payments, or conducting an audit of historical transactions can be extremely time-consuming for customers with multiple accounts across a range of banking providers.

   Open banking allows third-party multibanking providers to retrieve key account information and categorize transactions.
   With consumers in the euro area making roughly 50 billion retail payments a year, searchability is vital to cut through the noise and stay in control of personal finances.
   The ability to search across multiple accounts improves financial visibility and lets customers find exactly what they’re looking for with the click of a button. Categorization and account insights further help users to understand and manage their finances better.
   
   

2. One login.
   Accessing multiple accounts through a single interface gets rid of the need to use different logins for individual accounts and simplifies authentication processes by providing a gateway to multiple accounts.
   Open banking rules focus on data privacy and security. Approved third parties comply with strict regulations and use Strong Customer Authentication (SCA) to bolster verification measures and provide a stable foundation to support future open banking applications.
   For users, the centrally managed security procedure enabled by multibanking means customers only need to deal with a single authentication process, which lowers the technical burden to access banking services.
   
   

3. Business insights.
   If you’re a small business owner, knowing exactly how your company’s liquidity is developing on a daily basis is vital to manage resources and inform time-sensitive investment decisions.
   While traditional methods of account reconciliation involve a time-consuming and error-prone process, open banking in Europe provides a universal option to automatically cross-check thousands of data points across a range of independent accounts.
   Small businesses can harness the power of automatic account reconciliation to retrieve real-time statements from multiple banks and create an up-to-date snapshot of their financial status.
   
   

4. Seamless transfers.
   Open banking payments facilitate seamless transfers between accounts in a safe and secure manner.

   For example, if a business wants to make a cash injection into a certain department or an individual wants to pull money from a current account into a savings product, open banking supports fast and pain-free payments through a single interface.
   For third-party financial service providers, partnering with an open banking platform that’s part of an established banking ecosystem with international reach will reduce barriers to entry when engaging with new customers and boost conversions.
   
   

5. Cash flow management.
   Poor cash flow management is one of the main reasons small businesses fail. Linking multiple business accounts to monitor cash flow in real time promotes sustainable growth by helping companies manage their debts and operate within their financial limits.
   If your accounts are scattered across multiple banks, it can be difficult to anticipate cash flow and effectively manage spending. In an uncertain economy, cash flow management is more important than ever to give businesses the financial visibility they need to regain stability.

Klarna Kosma’s established bank network gives us both the technical capability and market exposure to support fintechs and TPPs with sophisticated open banking solutions.

We offer powerful tools to help financial innovators develop intuitive multibanking solutions with seamless UI flows. We also offer a white-label service so your business can reap the benefits of conversion optimization while also maintaining brand consistency with a bespoke on-brand front-end.

Kosma harnesses open banking to break down barriers in finance and improve connectivity between banks, TPPs and end-users. We’re focused on simplifying open banking and connecting TPPs with more than 15,000 banks in 27 markets. With a single API and just a few lines of code.