On January 13th 2018, Open Banking was officially launched in the UK and the revised Payment Services Directive (PSD2) came into force in Europe.
Since then a steady pipeline of new entrants have arrived in the open banking ecosystem developing compelling and innovative propositions that will ultimately help customers move, manage, and make more with their money.
In September 2018, the Open Banking Implementation Entity (OBIE) announced the Open Banking Standards, version 3. It covers all products with payment capabilities and include the following core components:
In September 2019 the Regulatory Technical Standards (RTS) came into force under PSD2. They mandate all the banks across Europe provide online payment services to comply. This is to be done either by implementing a dedicated interface (API interface) that meet requirements or must provide an updated version of their existing customer interface.
Cardlytics published its ‘Open Banking in the UK’ survey in December 2018. They surveyed 3000 UK banking consumers to try and identify what the industry could do to drive up open banking interest and adoption. 74% of those surveyed hadn’t heard of open banking. It concluded that there were four key factors which financial firms need to address with consumers:
Many in the industry believe that better products and services will increase awareness of open banking. Demonstrating trust will be the top priority.
Customers are worried about cybersecurity, skeptical about the need and benefits, consumer control and value proposition.
Providers with whom consumers already have financial relationship are most likely to succeed in open banking propositions. There is a need for comprehensive and simple messaging across the industry to help people understand what open banking means, the potential it brings, and how their money and personal data will be kept safe. Customers need to know how open banking will benefit them.
Strong API developer portal capabilities are key to winning in the open banking era. A few progressive banks such as BBVA, HSBC, Nordea have started to engage by publicly launching their own developer portals, including APIs, and sandbox environments. These capabilities allow banks to offer secure and controlled access to third parties to interact and use the bank’s functionality and customer’s data to create next generation financial services. Banks that can put the required capabilities in place to effectively and seamlessly engage with third parties and facilitate an open banking ecosystem through their platforms will benefit from an early mover advantage. This will, in turn, strengthen the banks’ API offerings and build a supportive ecosystem of third parties that drive customer value creation.
Imagine an app that manages all your bank accounts, deposits, individual savings accounts, mortgages, and investment portfolios held with multiple banks, in one place. It creates your risk profile and asks for your goals. Added to that, the app is integrated with non-financial partners that help you achieve your goals.
Virtusa offers a holistic approach to open banking adoption, providing a platform, and a suite of accelerators and frameworks to get organizations ready for the Open API economy.
Opportunities with open banking are untapped.
Visit www.virtusa.com/open-banking for more information on Virtusa’s open banking solutions.