Changing consumer patterns, the emergence of non-traditional competition (e.g. FinTechs, blockchain and artificial intelligence) and initiatives undertaken by the Reserve Bank of India have provided the ideal timing for Indian banks to embrace open banking or risk losing out to new, innovative players. However, there are still numerous issues that need to be resolved if India is to truly jump into an era of open banking, especially those surrounding data ownership and data privacy. For this, all eyes are waiting on the draft language of India’s forthcoming Data Protection bill.
As India awaits clarity regarding data ownership and privacy, it is worth mentioning that open banking represents a potential solution to help increase financial inclusion in the country, especially among the unbanked and underbanked, as open banking generally reduces costs and makes it affordable for financial solutions to reach greater numbers of consumers. It remains to be seen, however, if India will fully-embrace this move or if it will remain somewhat reticent of technological solutions that go well-beyond one-time passwords and ATMs.