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Why should businesses consider transparency when building their own financial services?

Modern consumers expect a certain level of transparency when using or receiving a service. In fact, WhatsApp, Facebook Messenger and other communications software have drastically changed our standards and the way we communicate, with the end-user knowing exactly when a message has been delivered and read by the receiver.

Customers want this same level of visibility in other aspects of their lives, especially when it comes to handling their money. Thankfully, with Open Banking enabling more innovation from third parties in the payments and banking industry customers now have access to solutions that are transparent and dedicated to their needs.

In today’s ever-changing climate, customers don’t want to be caught out by hidden costs when making an international payment with multiple currencies involved. They want to know what is being done with their money and why. Research from Futerra shows that end-users desire higher-levels of transparency in order to trust a brand or solution. To go further, setting false expectations is the top frustration among consumers according to a study from Accenture.

Experiencing high levels of transparency from the beginning of the user journey may help to manage expectations and to build trust with a service provider at the same time. For the payments and banking industry, users demand the same experience as when sending a parcel from A to B: knowing exactly the status of the parcel (payment status), the duration of when it will arrive (payment processing time), the final shipping costs (transaction costs), and a notification when their parcel has been received by the recipient (payment notification).

How APIs enable transparency

Until now, this amount of transparency, in cross-border payments particularly, was not possible. Each bank, electronic money institution (EMI) or payment institution (PI), was only able to guarantee and share information of its own leg of the payment. Local payment market infrastructures play a key role in the journey of a cross-border payment: when an international payment reaches a domestic or regional market, the local clearing and settlement come into the picture. The interoperability between domestic and cross-border payments services is often the reason why payments are not seamless and lack transparency.

However, API-based technology and innovative cross-border payment solutions, such as SWIFT gpi, are making all this possible. APIs provide the means for financial institutions and corporates to connect to a Banking-as-a-Service (BaaS) provider that offer this amount of transparency. End-to-end payment tracking; offering full transparency on exactly what fees are being charged; providing information on the duration of the payment processing time; and sending payment notification when a beneficiary has received a payment – these features are just a couple of examples of how what’s possible with an innovative BaaS solution.

Through APIs, businesses can embed these features from a BaaS platform into their own back-office systems, without extensive integration lead time. This allows them to provide the transparent services that their customers require while saving costs, time and efforts by not having to invest in departments and staff. Instead, companies can build these financial services through a single cloud-based platform.

The benefits for financial institutions and corporates

Banks, EMIs,and PIs that offer transparent financial services benefit from:

  • reduced operational costs and time spent on investigations;

  • reduced front office costs for customer calls and complaints;

  • faster investigations into claims of non-receipt;

  • the ability to offer innovative services to customers;

  • better end-to-end services to clients

Corporates are also benefiting from providing these financial services which are enabling their customers to:

  • track payments;

  • get confirmation that the payment was credited on the account of the beneficiary;

  • easily reconcile payments and invoices;

  • speed up the supply chain and reduce risk – e.g. goods are automatically being dispatched as soon as the payment has been received

Companies could easily lose the trust of their customers if they don’t provide transparent services. End-users will look elsewhere to find services that give them additional insight into the handling of their money and where additional fees are being charged. This is particularly important when providing international payment services. Transaction charges and the exposure to currency fluctuations can be added on to a transaction at many points throughout the payment journey. Clearly, it’s important for customers to have sight of this and to understand what charges are being applied and when.

Customers also want the security of knowing where their transaction is at any point in the payment process. This way, if a payment is queried by a recipient, they can see where it is in the process, or whether it has already arrived. 

At ONPEX, we enable businesses and financial institutions to build their own financial services that are transparent through our cloud-based BaaS platform. Through this, we give our clients access to API-based solutions that allow them to offer greater levels of visibility.

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ONPEX is a leading provider of transaction banking and cross-border payment services to fintechs and digital businesses. Based on our flexible, API-driven BaaS platform, our clients create user-friendly, compliant and cost-efficient solutions.

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