IBM is looking to cash on the open banking era, launching a platform designed to bridge the gap between legacy systems and the API future while helping banks meet new regulatory requirements such as PSD2.
Open Banking has emerged as one of the hottest areas in financial services, driven by new rules in Europe and the UK, as well changing customer behaviour and a raft of fintech upstarts entering the fray.
Meanwhile, from a revenue perspective, today’s global banking industry is characterised by low return on equity, slow growth, and the imposition of strong cost controls.
IBM argues that there’s an urgent need to accelerate digital transformation to help banks overcome these challenges and take advantage of new revenue channels, but, for most firms, a rip-and-replace strategy is not a viable option.
That's where Big Blue's new Open Banking Platform comes in, enabling banks to to take an incremental approach to open banking, opening up their legacy systems and tapping into APIs. Bridging the gap between core systems and the cloud, the platform acts as a microservices layer on top of banks' existing environments to enable easy, plug-and-play integration.
Say Tom Eck, CTO, industry platforms, IBM: "In short, it enables you to augment and revitalize your existing systems, rather than undertaking the cost, effort and risk of a complete overhaul."
Banks can open up existing systems and share them internally as microservices using architectural tools. IBM claims that by exposing banking microservices as APIs in the cloud, banks can enable new channels, nurture fintech collaborations, and unlock additional revenue streams.
The platform features an ecosystem that contains APIs from IBM Financial Services and third-party fintech companies, letting users choose from a range of APIs to add capabilities such as financial risk assessment, payments, AI and blockchain to their apps.
IBM has also developed a PSD2-specific solution, which works with the open banking platform to help clients enable PSD2 standards-based payments from their core systems.
Says Eck: "The future of banking isn’t just about modernisation or churning out apps. It’s about re-thinking banking models to create new approaches that are open, intelligent and agile. The IBM Open Banking Platform provides a risk-managed path to digital transformation, so you can achieve fast time to market and stay ahead of regulatory requirements."