Open Finance is a developing movement that has the potential to change financial markets while also generating considerable profits for businesses that implement it.

In fact, it is predicted that by 2022, it will generate global revenues of more than $9 billion. And the trend is fueled by two notions that are related but have significant differences: Open Banking and Open Accounting. CRiskCo developed the second.

What is Open Banking?

It’s a concept in which financial information from consumers in the financial ecosystem can be exchanged with prior authorization utilizing processes that try to consolidate the data in a single system via an API.
In this sense, regardless of the financial company that delivers the product or service, data from bank and savings accounts, credits, cards, insurance, and other transactional data is kept in a single system.

This centralization allows financial system clients to access data from several providers’ financial products through a single application. While it makes financial institutions’ decision-making easier and allows them to offer financial solutions with better added value, customized to each user.

Open Banking, on the other hand, also promotes centralizing and sharing public and aggregate data from financial organizations. For instance, branch locations, the terms and conditions of a product or service, the degree of compliance in those credits, or the recovery of an overdue portfolio, to name a few.

What is Open Accounting?

It shares the same idea as Open Banking (centralizing information through an API), but instead of integrating multiple accounting systems into the platform, it proposes integrating different accounting systems into the platform.
It is one of the methods for accessing and viewing different accounting systems records, for example. Financial institutions can use this information to offer loans and other financial products, particularly to business customers, by viewing invoices, tax settlements, and other critical accounting information.

Difference between Open Accounting and Open Banking

Open Finance encompasses both concepts.

Basically, Open Banking consists of sharing and centralizing public, aggregated and transactional data from financial entities and their clients. Open Accounting enhances open finance operations and brings impartiality to the examination of financial product and service granting, minimizing credit risk and even supporting the delivery of more personalized offers to clients, by not restricting itself to transactional information.

CRiskCo is a valuable ally when it comes to Open Accounting, as it specializes in it and offers not only in accounting integration, but also does a machine learning and AI-based analysis.