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In the previous article, we have already seen what multi-banking is. We are now aware of how multi-banking is an extension of open banking and how it operates. Once the basic details about the technology are known, the next obvious question is whether or not a technology is worth implementing.
In order to make this decision, it is important for us to know the pros and cons of the decision. This article aims to provide this information. In this article, we will have a closer look at the pros and cons of multi-banking.
Multi-banking is the new buzzword in commercial banking. This is because it offers several benefits to corporations that use it. Some of the important benefits have been listed below:
For example, if a corporation thinks that JP Morgan Chase provides the best corporate credit card service, they can use that service without worrying about how this service will get integrated into their overall banking landscape.
Hence, multi-banking provides more freedom and flexibility to individual corporations. This feature is quite valuable for corporations, especially ones which have business interests across the globe. This is because when corporations transact across the globe, they are compelled to have banking relationships with many local banks which they find difficult to integrate into their overall strategy. Multi-banking helps get rid of these issues.
Hence, companies have the opportunity to significantly simplify their systems using the multi-banking framework.
Hence, the cost of implementing and maintaining a multi-banking-based system is quite low from a corporation’s point of view. This lower cost is a catalyst for faster adoption by corporations.
There are some disadvantages associated with multi-banking as well. Some of the prominent ones have been mentioned below:
Companies do not have any control over the performance or service levels of such systems. For multi-banking to be successful, corporations must be able to trust the functioning of such third-party systems. Right now, this trust is lacking and may take some time to build.
Multi-banking requires several layers of security to ensure data security. The technology for providing data security is still being developed and is likely to undergo a lot of change in the forthcoming years.
With the passage of time, the technological infrastructure required to support the multi-banking ecosystem will come up and that is when the services will be delivered in a more efficient manner.
Hence, it can be said that multi-banking definitely has more pros as compared to cons. Also, it is likely to become a norm in the future. However, as of now, there are a lot of challenges and roadblocks which need to be figured out.
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