Open Banking Solutions to drive business value with the power of APIs

By Vishal Sinha, President and CIO, Tranzlease Holdings (I) Pvt. Ltd

The concept of Open banking is no more a thought but reality and will be a norm very soon. The digital revolution can’t be undermined as the pace and rate at which these digital innovation is being delivered through FinTechs, change is significant, visible and with noise in the banking ecosystem. Open banking economy is going to bring a paradigm shift in the way banking business is run vis-a-viz the new business model which is going to emerge and evolve once it comes in to force post transformation. The regulatory angle has also pushed it to a track where the focus to drive innovation is to allow market place opportunities with open banking framework.

The implications are very broad and far connecting customer expectation with Open Bank API and new business opportunity with emerging revenue streams including fierce competition among banks impacting retail banking to commercial banking to capital market including wealth market. This openness is going to create a competitive challenge for banks as customer demand is for an Omni channel platform where in their contextual experience matches their digital experience.

Open Banking in simple terms: Open banking is the creation of standards across data, APIs and security - a suitable governance model overseeing the standards to ensure they are managed and updated with regulatory and other changes relevant to the market. In the simplest terms, open banking APIs enable interaction with a bank’s data without compromising account information.

Open banking APIs brings in the power to fundamentally change the relationship consumers have with their banks–and how they access and manage their money. The open bank API brings in the flexibility to adapt to the innovation and consumer adoption of new products/services which will continue to evolve, inevitably in places that no one predicted.

Challenge and Opportunity

Open Banking initiatives are redefining the financial services landscape in a number of ways - from enhancing the services institutions offer to increase their revenue from new channels. More importantly, however, an Open Banking initiative can lead to a secure form of data exchange that accelerates collaboration with outside organizations and third-party developers and in so doing, redraws the boundaries of what a bank is and what products and services it provides.

Disruptions & Noise – This disruption has a noise demanding a shift from product to customer centric thought process even before banks position, align and differentiate themselves in this digital ecosystem and prioritize their major process re-engineering. A vibrant and robust business to consumer ecosystem needs to be created and bring it technology benefits of CRM, Big Data Analytics, Machine Learning, IoT and business intelligence platform. This stems from a two sided demand within banks & financial players who are eagerly waiting for a better and faster way to pay, access and control their money and merchants who can capitalize on anytime – anywhere with range of device can significantly establish their digital market place. The implication of these changes are even more crucial to decipher as banks will continue to face a strong competition from new digitally first player having agility, consumer mindset and no legacy technology debt to navigate.

Open APIs economy demands sustainable competitive advantage and what it’s thriving to give to customer is tools to have rich and contextual experience and act as an enabler to collect insight and actionable data whether it is customer purchasing decision or contextual info related with risk profile or loan profiling opening doors to multi-channel marketing.

Data Access and Information security: Sharing data with third party/aggregators (login credentials) calls for much cleaner methods of data exchange where in open API comes as a direct answer to mitigating concepts like screen scraping and provides an opportunity to banks and financial services to collaborate with third-party developers securely through APIs with servers connected through unique token that identifies and customers having control on data through a real-time secured exchange of data that enables banks and financial services to extend their services securely.

To summarize and visualize, Open banking and API economy is bring a new era with opportunities which is tangible and bursting in a fast pace however it depends on the preparedness of this digital move and how this transformation will take place while making this digital move that too in a dynamic environment where in innovation will always have to match customer expectations as a prerequisite meeting regulatory framework that too when banks IT systems predominantly has legacy IT systems with less time to change.

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