When security is addressed, the possibilities of an open approach to banking become clear. In order to provide a reassuring customer experience, the guidelines also suggest a multi-step authentication process, so banks will need to be mindful of potential “over-engineering” that could add unwanted friction to the authentication process. The guidelines call for a combination of bank-grade secure customer authentication in all circumstances, which will be incumbent on the bank to provide. The new regulations define an approach intended to deliver a high degree of security along with a clear and reassuring customer experience. In an era of open APIs, security is paramount if banks – and the TPPs consumers choose to allow to access their financial information – are to maintain consumer trust. Open Banking regulations require that banks build APIs (application programming interfaces) to make information available to trusted third-party providers (TPPs) This is a radical shift from the traditional financial services approach of tightly managing customer engagement through their own channels. This new environment requires new ways of operating and thinking. Faced with deadlines, many banks initially focused on a sprint to compliance, only to find they are facing a marathon of sustained change. The introduction of PSD2 and Open Banking has been one of the biggest compliance tests the financial services industry has ever faced. These regulations aim to create an industry-wide framework for accessing financial information, with the aim of improving customer satisfaction and encouraging competition between banks. A case in point is the introduction of the European Banking Authoritys Second Payment Services Directive (PSD2) in Europe and Open Banking regulations in the UK, which are set to spark a significant evolution in how institutions think about, provide, and commercialise financial services. Driven by changing consumer expectations and the development of new technologies, this transformation is being further spurred with regulatory initiatives.
Mainstream banking is in the midst of its biggest transformation since computerisation first took root in banks half a century ago.
We’ve had the advantage of seeing initial efforts play out in the marketplace and have applied the insights gained to our technology to help organizations become compliant, stay compliant and maximize the opportunities ahead.Nick White, Fiserv: Fully leveraging APIs will give banks the insights to deliver intelligent experiences to customers “This transformation will extend well beyond the current race to comply. “The costliest mistake financial institutions can make in the move to open banking is to focus only on the immediate fix,” said Lee Cameron, senior vice president, FinKit, Digital Banking, Fiserv. Financial institutions also have the option to utilize FinKit for Open Banking to authenticate TPPs and gain required consumer consent for information sharing. The solution includes access to pre-built PSD2 and Open Banking APIs and facilitates ongoing compliance through API version control, release management and distribution, the company said.įiserv added that the white label developer portal enables financial institutions to engage TPPs. “Sound strategic choices taken while these regulations are in their infancy will allow institutions to manage their resources to ensure compliance today, and to focus on innovation and competitiveness long-term.”Īccording to Fiserv, FinKit for Open Banking is a complete, fully managed service to run, monitor and support the application programming interfaces (APIs) needed to share information with trusted third-party providers (TPPs), while also facilitating business services and enabling developers. “Though PSD2 and Open Banking are chiefly viewed as regulatory requirements, they represent a significant opportunity for banks to partner with trusted third-party providers to integrate financial services into their customers’ everyday lives, while also driving more innovation inside the banks,” said Ken Paterson, vice president, Special Projects, Mercator. Fiserv said FinKit for Open Banking is designed to enable immediate and long-term compliance with these regulations and put in place the capabilities required for banks to maximize the opportunity of open banking.
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