How FS organizations can enter the new era of digital banking

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This article first appeared in Finance Digest.

The financial services (FS) industry is currently undergoing major change. With the adoption of new digital habits, consumers expect more convenience, choice and flexibility in their banking relationships. At the same time, concerted regulatory pressure to encourage innovation and stimulate competition in the banking industry has accelerated the investment of FS organizations in Open Banking initiatives around the world. The race to harness customer data and deliver superior, next-generation services and experiences is on.

But there is a problem. The vast majority of SF organizations do not comply with mandates such as the EU’s PSD2-SCA and do not meet application deadlines. In fact, according to recent research from Delphix, only 3% of FS companies are confident they are ready for the next major Open Banking application deadline, slated for September 2021. despite a two-year lead time.

Whether it is challenges related to data privacy, compliance or a lack of resources and skills, FS organizations must overcome the obstacles that are currently hampering the open banking revolution. Only then will they be able to enter a new era of digital banking.

Main obstacles to opening up banking services

Open banking has the potential to revolutionize financial services. Connecting banks, third parties and technical providers – allowing them to share authorized data – will bring more competition and innovation to the industry, which in turn will lead to better products and services. For customers, it will bring more choice and better experiences. For FS organizations there will be new revenue streams and a sustainable service model that will allow them to keep up with new entrants to the market, including neobanks and rival startups.

But using data for innovation can be difficult because it often exists in many disparate systems, silos across an enterprise in different departments. This makes it extremely difficult to deliver it safely, effectively and efficiently to those who need it to glean valuable information or drive new projects. The heavy reliance on existing infrastructure and basic banking systems in need of modernization exacerbates this problem.

Accessing and effectively using data for innovation becomes even more difficult when you add privacy and compliance concerns to the mix. In fact, 62% of financial services companies cite protecting sensitive data across multiple systems and APIs as the biggest data privacy and compliance challenges. Without access to a constant stream of recent, compliant data for the development and testing of APIs and new applications, FS organizations risk losing ground in industry transformation. In addition, they can face heavy fines related to non-compliance with open banking regulations across the world.

While FS organizations must protect sensitive data across multiple systems and Application Programming Interfaces (APIs), they must also ensure that their compliance measures do not limit access to data and preserve its quality and ease. of use. It’s a delicate and difficult balance to strike, with the majority of financial services firms (92%) predicting that their organizational operations will be disrupted when they start deploying Open Banking APIs. However, there are ways to increase their chances of success.

Opening the door to a better bank

Traditional test data management tools are simply not up to the task of scrambling the data of a multigenerational technology stack. Instead, they make it difficult for business teams to perform integration testing while maintaining compliance. That’s why FS organizations should look to DevOps as a way to deliver compliant data quickly through an API-driven data platform.

An API-driven platform that combines data delivery and compliance across multigenerational systems could automate, scale, and optimize testing while mitigating compliance risks. Such a platform would reduce the latency resulting from an inability to find and protect sensitive data and deliver and update environments (for developers working on APIs and new banking products), while increasing productivity and time to market.

BNP Paribas is already a pioneer in combining data compliance and on-demand delivery. The management team wanted to make it easier to use data to increase productivity and performance. By adopting an API-based platform, BNPP has succeeded in radically accelerating the delivery of environments, so that development and testing teams around the world can triple the AI ​​projects going into production and accelerate the delivery of environments. adoption of the cloud. This project improved the quality of the software, reduced downtime and reduced the time to launch its open API market. All of this was achieved while maintaining compliance.

In the first six months of 2020, the number of users of open banking apps or products in the UK doubled, and by February 2021 it had grown to over three million. There is no doubt that Open Banking is the future of finance. In order to stay ahead and thrive tomorrow, financial services companies must act today. Implementing an API-based data platform will enable people working in the industry to unleash the power of their data and enter the Open Banking revolution.

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