Open banking and APIs are offering traditional financial institutions the efficiencies and service improvements normally associated with nimble fintech disruptors.
Open banking is the key to traditional financial institutions holding on to the distribution of financial products, and by extension remaining relevant and profitable in a digital age.
In a study by Temenos, 52% of respondents said they see opening up their platform to third parties as more of an opportunity than a threat, and 60% said doing so is essential to deal with new non-bank competition.
On the other hand, 53% said they can’t exploit a wide enough range of user interfaces due to technology or cost constraints, and only 30% saw open banking as a high priority, grappling as they are with other challenges such as low interest rates and regulation.
Regulators, however, might be one of the biggest drivers of change in open banking, particularly in Europe.
Europe’s Payment Services Directive 2 (PSD2) includes provisions to force banks to open up access to customer data to third parties via APIs by 2018. Already, more APIs are come to market, addressing the demands of PSD2.
For most banks, it makes commercial sense to buy an API solution or tooling to implement faster, rather than invest in building a one-off bespoke solution. To address PSD2 demands with a bespoke solution not only harms the overall ecosystem, but also creates additional risk and expense.
Sourced through Scoop.it from: www.information-age.com