Open banking is now a much talked about topic in Australia. Brought in to create a more competitive financial ecosystem, it aims to deliver products, services, and experiences that customers will keep wanting more of. Although delays have taken place, by
July 2020, all banks in Australia are expected to have their data opened up via APIs. Banks like CBA and Westpac OB already have their product APIs available.
Open banking is the perfect example of technology taking center stage of a customer experience initiative. It requires you to create a technology ecosystem that is secure and doesn't deter user experience. Additionally, it forces you to take a look at the
architecture you have relied on for several years and decide how you should reuse or replace each component to support Open APIs. This is a brief summary of an article I wrote a few months ago, on the technology requirements for Open Banking in Australia.
Technology for Open Banking: Why, What and How?
Open banking is, in essence, an integration scenario. Although the underlying technology is API management, in order to create a secure ecosystem between data holders and data recipients, banks need to evaluate several other technology areas before they
start open banking. Here are the 4 key areas you should think about when evaluating technology requirements for open banking:
1. Make sure your APIs are superstars
Most banks regardless of size will already use some form of APIs. This could simply be for exposing data internally, for example between different departments in the bank, or externally to facilitate mobile or digital banking.Open banking APIs have to be
treated a little differently. They need to adhere to the Open API standard that is mandated by Data 61. Features such as data recipient accreditation validation, a sandbox environment for data recipients to test out APIs, and API analytics should also be provided.
2. Think security every step of the way
The Australian Open Banking movement creates an ecosystem that exposes sensitive data to parties inside and outside the financial services domain. So, it goes without saying that security is a top priority for open banking. You should evaluate your existing
identity and access management platform to see if it can support the following functionality for open banking APIs.
- Strong Customer Authentication (SCA) Strong Customer Authentication (SCA)
- Consent Management
- Fraud Detection
3. Make your legacy system work for open banking
One of the first questions you may ask before you start your open banking journey is “Can my legacy system handle the requirements of open banking? And if it doesn't, how will I invest the time, effort and budget to make the change?” The best way to approach
this is to figure out how the two can come together. While legacy systems may not be completely adaptable to open banking there are always ways around it.
4. Create a technology vision for open banking
Throughout this article, various components of technology that are essential to open banking were discussed. The important thing is, if you view technology only as a support role in your business, your open banking implementation will not be successful.
What is important to understand is that all those components add up to a bigger picture - technology doesn’t just play a support role in financial services. Therefore, a technology vision should be at the heart of your open banking implementation. It is this
vision that will translate into a customer experience that can set you ahead of your competition.
Your IT strategy and vision is only as good as the actual technology you use. So while you may have a foolproof strategy, it is critical to build technology partnerships with stakeholders that are able to support your vision.