open banking

The banking and finance sector has already seen some major changes in technology use in recent years. These show no signs of slowing down but newer developments like AI are starting to have an impact too.

Here are some expert views on what may be in store for the fintech sector in the year to come.

While much literature has been written on best practices for systems architecture, the desired outcomes have been as elusive as they have been sought after. The de-facto standard for enterprise systems that exists in reality is often closer to A Big Ball of Mud.

Very rarely is an organization’s technology (the infrastructure, the software or the set of systems powering the organization) planned as the state in which we see it today. All early systems need to scale, and most companies in the growth phase don't have the bandwidth to deal with this graciously.

The proliferation of fintech platforms has prompted consumers to demand more from their banks. Historically, legacy industry resistance to securely sharing customer data with third parties has deprived banks of opportunities to engage customers and foster longer-term retention more deeply. Many incumbent banks felt an open banking structure threatened their business models. However, as banks shift their mindset and embrace open banking, it’s evident that the 'mainstreaming' of an open banking infrastructure benefits both banks and consumers through a larger marketplace of product options.

Consumers can use open banking by consenting to share their data with other providers securely and receive a more comprehensive range of product offerings and more personalized and efficient services -- all in one place.

We all know that bad bots are, well… Bad. But open banking is supposed to be good, giving consumers more control over their finances. Combine open banking and bad bots though and you have opened up a world of new threats to banks, customers, and their data.

We spoke to Alan Ryan, AVP for UK and Ireland at Imperva, about how open banking has created new opportunities for cybercriminals, and why the traditional siloed approach to security needs re-appraising.

Open banking first began to roll out in 2018, following the introduction of the PSD2 legislation in the UK, but five years on new research finds that most consumers still don't understand what it is, and the vast majority don't believe that it's safe.

The study from NTT DATA shows 58 percent of UK consumers still don't understand what open banking is, while just 16 percent believe that it's completely safe.

Compliance with the EU Payments Services Directive (PSD2) is the next key milestone in the continued evolution of open banking. This evolution involves a new set of rules that will change how we confirm our identity when making purchases online.

The implementation of strong customer authentication (SCA), on top of existing open banking capabilities, will require merchants and payment service providers (PSPs) to work together with technology suppliers, card schemes and many others to deliver SCA in a way which works well for customers.