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Unlocking the Unmet Potential of Open Banking

Unlocking the Unmet Potential of Open Banking

Last week, I had the privilege of attending a panel discussion hosted by Natwest, focusing on the unmet potential of Open Banking. The panel featured industry experts from HSBC, UK Finance, Payment Systems Regulator, Open Finance Association, and financial services consultants.

The discussion was centered around a report commissioned by Oxera, which delved into the economic obstacles hindering the widespread adoption of Open Banking.

Addressing Low Open Banking Adoption Rates

One of the most startling revelations was that Open Banking has only been adopted by 10% of the UK population. This poses a significant challenge for the industry, especially for the CMA9 and other banks. The report suggests that one way to address this is through the development of premium APIs, which could provide the necessary incentives for banks.

Challenges in Open Banking for TPPs

Third-Party Providers (TPPs) face the challenge of API drift, where different banks and AISPs have variations between their APIs and the standard specifications. This increases the overhead for TPPs, making it difficult to maintain a consistent and reliable service.

Geographical Variations in Open Banking

Open Banking is not a one-size-fits-all solution. Different countries like New Zealand, Australia, and the UAE have their own flavors of Open Banking, influenced by various privacy and trust frameworks such as PSD2, PSD3, GDPR, and CDR.

Customer Experience vs. Security

The trade-off between customer experience and security is a delicate balance. While platforms like Apple Pay and Google Pay offer excellent customer experiences, Open Banking needs to catch up without compromising on security.

Building an Open Banking Payment Infrastructure

The open web offers a fertile ground for building robust payment infrastructures. However, performance monitoring is critical to ensure that the systems are both efficient and secure.

Building Customer Trust

For Open Banking to succeed, it’s crucial to build customer trust. This involves ensuring low latency in transactions and robust API security measures.

Supporting Regulators and JROC

The Joint Regulatory Oversight Committee (JROC) has outlined a roadmap of 29 actions spanning six core themes, including leveling up availability and performance, mitigating the risks of financial crime, and ensuring effective consumer protection. The report suggests that oversight of the Open Banking ecosystem might be best managed by a regulator to ensure stakeholders have incentives to provide new products and to offer some basic levels of consumer protection.

How APImetrics and Contxt are Helping Our Open Banking Customers Deliver API Reliability and Trust

In the rapidly evolving landscape of Open Banking, reliability, and trust are not just buzzwords; they are necessities. APImetrics provides run-time API governance solutions that offer a holistic, end-to-end view of performance, quality, and functional issues across the API surface. This enables organizations to better serve their customers and end users. Their patented technology automates the process of producing regulator-ready reports and integrates with many of the leading developer operations suites.

Contxt offers an API Context Maturity Model that allows businesses to incrementally enhance the security, privacy, and effectiveness of their APIs. This model provides a structured approach to API management, balancing the need for speed and business value with security and privacy requirements. Moreover, Contxt’s persistent monitoring capabilities ensure full visibility across API infrastructure.

Open Banking holds immense potential, but there are several challenges that need to be addressed for it to reach its full potential. By focusing on these key areas, we can pave the way for a more inclusive, secure, and efficient Open Banking ecosystem.

By Mayur Upadhyaya, CEO & Cofounder, Contxt


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