Open banking is the most important development in the financial services market. To make the promise of open banking come true, establishing trust is key. Access management is the enabler for safe transactions enabled by open banking.
Almost half of financial services executives say interoperable open banking strategies are very important to the future of banking.
Pymnts, April 2020
Supporting collaboration in digital banking ecosystems is at the heart of TrustBuilder’s IAM platform. TrustBuilder combines user experience with tight security, while also ensuring short development cycles.
When financial services organizations partner with other companies to exchange data, APIs play a crucial role. TrustBuilder acts as a token exchange between microservices and allows easy integration with third-party applications. TrustBuilder secures systems at the edge, and between microservices, addressing security of the APIs on an individual level, authenticating identity and privileges at each hop.
Adding services and Identity providers is made easy by TrustBuilder.io. TrustBuilder.io contains a catalog of services that allow users to safely connect service providers to identity providers and set up authentication policies. By providing out-of-the-box connectivity, TrustBuilder.io allows players in the open banking market to add new partners to their ecosystems quickly and securely, decreasing time to market.
Different services may require a different level of authorization. When a customer moves from one service to another, accessing data or resources from different partners in the digital banking ecosystem, TrustBuilder will provide adaptive authentication. Adaptive authentication checks the criteria that apply to grant the user access, based on the context of the session, and supports all necessary authentication mechanisms. Thanks to our use of Attribute-based Access Control (ABAC), our customers can easily decide what attributes are needed for what level of authentication.
“Open banking is the biggest change to the system since the invention of the checkbook.”
Alan Lockhart
Head of Open Banking and FinTech solutions, Royal Bank of Scotland
Open banking increases competition between financial services firms, by making them work together and share data. The principle is driven by European Union regulation but is also adopted outside of the EU. Financial services firms need to prepare for open banking as a worldwide phenomenon.
The European Payment Services Directive 2 (PSD2) has a double aim: 1/ break open the traditionally closed financial services market to allow new entrants to compete, and 2/ provide more transparency to customers of financial services. One of the most visible effects of PSD2 is financial aggregation, which makes it possible for customers to consult their accounts with different banks through the application of one specific bank.
The principle of open banking is also supported outside of the EU. Since 2018, the nine largest banks in the UK are required to allow licensed startups direct access to their data, including data on transactions between accounts. In Australia, the open banking obligation for financial services forms part of the customer data rights project. In time, similar regulations may apply to any financial services company globally.
While open banking forces financial services companies outside of their traditional role and allows FinTechs to compete with lower-priced services, the open banking model provides a win-win for financial services players and consumers.
Open banking has fueled the evolution towards digital banking ecosystems. Rather than seeing open banking as a challenge, the most advanced financial services players have taken the opportunity to collaborate with partners offering financial and non-financial services. By combining services, financial institutions can now operate as a one-stop-shop, engaging customers with a broader offering and preventing churn.
Modern consumers are seeking ultimate convenience, limiting the number of partners they work with. Thanks to open banking, consumers now have a broader choice in services that are available through one mobile app. They can switch from one service to another without needing to authenticate for every new service.
Traditional banks sit on a vast amount of customers and data. Open banking allows traditional banking to activate these customers and their data with new revenue streams. The most advanced are already implementing services that help their customers and third parties.
Data of customers can be shared with third parties (providing the customer gives his consent) so that 3rd parties can give better offerings, and that the process of acquiring new services can be speed up. Think about allowing direct debit, but also proof of income, or having a job when you want to rent a house.
Banks are already offering services where their customers when purchasing online can see if better deals are available. Some banks go so far that they even offer to pay the difference in case a better offer was available at the time of purchase.
Banks can also provide additional services when their customers are purchasing something. Some start by eg offering insurance when purchasing a car, but why not go further and offering 3rd party install services when buying materials online.
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