Sunday, April 14, 2024

The Role of AISP in Open Banking

The acronym AISP is very important in the context of open banking. AISP is short for Account Information Service Providers. They are authorized and licensed third parties that are allowed to gather and process information about a user’s account with their consent. In order to be licensed for AISP activities, a business has to comply with the PSD2 directive and offer sufficient security for its services. Let’s take some time to look at and analyze the role of AISP in open banking.

What do AISPs do?

As we’ve already established, an AISP is an Account Information Service Provider. It’s a business model and a service that a company is able provide if it has sufficient licenses and authorization from the governing body in a respective country. With consent from the user, an AISP will retrieve information about their account, past transactions. This information can be used for analytics or for verification purposes.

It’s popular to compare the AISP service to something that only allows read-only access to a users’ financial information. However, AISPs cannot work alone. They have to communicate with another form of a legal entity, called Account Servicing Payment Service Providers or ASPSPs. The latter acronym is very long and the term itself just rolls right off your tongue. However, the hard definition just means banks, e-wallets, and other institutions that can offer financial services.

Designated AISP API is needed for the gathering and retrieval of financial information. AISP in open banking will manage consent from the user and disclose what information is being retrieved and what it’s used for.

What Benefits Can You Expect from AISP in Open Banking?

From the perspective of the user, arguably the most important thing is knowing what kind of benefits do AISPs bring to the table. If they are consenting to sharing personal information, the outweighing benefit has to be great, right?

It’s already apparent (although the implementation is only a few years old) that AISP benefits are noticeable and beneficial to both individual users and the banking sector, as a whole. AIS (Account Information Services) can help digitize almost every single transaction that was paper-based before. Digitalization of banking increases transparency and security.

Furthermore, it can speed up processes that were needlessly complex and filled with obstacles, completely out of place in the 21st century. For example, in the past, doing something as simple as getting a reference for tenancy required a visit to the bank, getting a stamped statement, and acquiring so much more documentation. Thanks to open banking, tenant referencing is managed with a single click. All the customer needs to do is to express consent.

One more popular instance of AISP benefits, noticeable to a broad range of consumers is loan application simplification. Instead of having to also bring a printed or upload a scanned and authorized bank statement, all you have to do is just log in using a designated AISP API and the open banking infrastructure will pass over all the necessary data. Hence, approval for loans and credit takes much less time!

AISP Regulation and Their Significance in Open Banking

AISPs are not regulated as strictly, as say PISPs (Payment Initiation Service Providers). However, the barrier for becoming a licensed AISP is still pretty high.

AISPs are heavily restricted in what data they can gather and process. Their services have to be compliant with GDPR or equivalent data protection regulations, in force elsewhere.

You can make a case that an AISPs are actually the most versatile tool in the sphere of open banking because there are almost limitless possibilities for its adaptation. Since it collects information, and information can be used for verification and analysis, you can offer almost all kinds of new services as well as simplify already existing ones. 

Sam Allcock
Sam Allcock
Sam heads up Cheshire-based PR Fire, an online platform that has already helped over 10,000 businesses to grab widespread media coverage on their news at an extremely accessible price point.

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