Nov 20, 2019

The words on everyone lips: OPEN BANKING.

How implementation of open banking can increase your competitive advantage.

If you haven’t heard what open banking is keep reading because now is the time to act. In a world where technology is involving itself in all sectors, the merger of the banking and technology sectors is particularly notable. Traditionally the banking and finance sectors have been required to be ‘tight-lipped’ and meticulously protective of their assets. Now moving into a more -open- world, banks are challenged with the progressively changing requirements. They are now required to ensure they are constantly innovating, implementing new services and technologies for their customers all whilst maintaining compliance. To keep up they must take lead from the tech sector, they must adopt open architectures. Adopting open banking will ensure you not only keep up with your competitors but give you an advantage over those who don’t embrace it. 

 

Embracing APIs

APIs aren’t going anywhere. They are the primary mechanism for building open platforms. Industry veterans, Google, Facebook, Amazon and the likes, along with smaller start-ups are allowing third-party companies to use APIs to access and alter their platforms and code. Giving access to such information and assets to peers may seem contradictory – in some cases this information ends up with competitors – however the results from embracing this way of sharing is significant. You are able to continuously innovate at speed keeping up with the market or moving first. There is the opportunity to consistently develop new products and services, not to mention the openness to sharing knowledge and technology.

 

Why Now?   

Soon – very soon – open banking and APIs will be standard, there are wheels-in-motion to make it so. In 2016 a Payment Services Directive (PDS2) was released in the EU included standards and guidelines for the use of APIs – it mandates banks open their APIs to third-parties. Australia has now followed suit with the Consumer Data Right legislation that was passed this year the aim to improve consumers’ ability to compare and switch between products and services. It will also encourage competition between service providers, leading not only to better prices for customers but also more innovative products and services. This is classified as “Open Banking” legislation in Australia. Under Open Banking, consumers will be able to access and safely transfer their banking data to trusted parties. Open Banking will be introduced in phases, with basic product information to be available from 1 July 2019.

Not only is regulation driving this change a study from IDC note “Six in 10 banks are open to partnering with financial technology firms (fintechs).”  Traditionally fintechs were seen as competitors to big banks, however embracing these start-ups as collaborators means they can work together, co-develop and create new ways to innovate and grow, all enabled by APIs. 

 

How can you become open?

In recent years we have seen most big banks become more agile, however generally speaking. Their development processes and architectures can be rigid as they are designed and built for large scale. By appreciating the value of open banking, banks need to leverage old architectures with contemporary approaches. By introducing open technologies and architecture, banks will see an acceleration in the implementation of APIs.

By identifying, training and hiring the right consultants’ banks can work towards attaining major improvements in open technology. These consultants must provide daily updates and adjustments to these new technologies, a vastly different approach to outdated models of the past. 

 

With the right team the next three steps should be taken:

Create Internally used APIs

By using existing software and architecture banks must create APIs that are simple and – most importantly – for internal use at this stage. By approaching from the inside out, the API code is written for the business by the business and minimise scope creep that can come if considering external factors when developing how the APIs will be used to the general public. This way, the API code foundation can be deployed and adopted quickly to ensure speed to market, and later evolved to meet external functionality requirements.

 

Build a core team across your organisation 

The focus here is to build a core team, across all internal business functions that concentrate on open banking. The team should include leaders, developers and programmers. This core team can work collaboratively to identify opportunities that can be acted on to create new technologies. A key area to look at would be micro-services. 

 

External community

With the internal team and APIs in place the bank can now start to engage with the external community. This can be with a pre-existing external community or the bank can build their own external community. By building a new community the bank can engage with external developers who share, build on or create new technology platforms that the bank and its customers have access to.

Banks are now turning to the technology industry to adopt new ways of thinking and improving their banking software. This new way of thinking, with the implementation of the above, can produce new, faster and advanced developments for banks and their customers. 

 

Is your organisation looking towards getting proactive with the new Open Banking standards of Australia? 

Here at Enex Consulting we have been instrumental in providing the strategy and thinking around best approach to testing the Open Banking ecosystem, governing it and running the testing regime on a day to day basis, including test automation, in partnership with our clients.

We work with Australia’s leading enterprises to transform their organisations via technology leading strategy, testing and development services. Enex Consulting was formed in 2014 by industry veterans from the enterprise software delivery and testing industry in partnership with a number of specific clients to address the lack of high-quality engagements currently offered in the market.  We specialise in large program delivery, testing strategy and capability / maturity assessments, DevOps alignment and organisational digital transformations.

We specialise in delivering our clients program objectives by partnering with them to transform their existing IT landscapes into their future Digital Vision on time and within budget.

 

To learn more please contact us.