Innopay supports Euro Banking Association deliver Open Banking paper

31 May 2017 5 min. read

The Euro Banking Association (EBA) has released a new paper into the impact of Open Banking within the industry. Key focus of the 33-page document is how new technologies can blend and merge within an open ended infrastructure to advance much needed customer-centricity in banking sector.

Open Banking refers to an ecosystem in which retail/corporate customers are in control of sharing their financial assets and personal data with third party providers of choice. For this purpose banks open-up and share their infrastructure (including data and functionality) and documentation (code) with third parties, usually through Application Programming Interfaces (APIs). This allows business professionals to understand the value the API could bring to their organisation or product, whilst at the same time it enables developers to see, check and experiment with the code.

The move follows a wider trend in the digital world, in which 'open’ ecosystems are emerging to become common practice. According to analysts, Open Banking ecosystems have the potential to revolutionise the payments and banking market. The key benefit for consumers lies in the improved service they can receive regarding their financial matters. The success of the FinTech movement indicates that there are customer needs that are still underserved by incumbent service offerings, which has opened up room for innovative players to fill this gap by technology-enabled financial innovations. 

Open Banking

The Open Banking approach also allows customers to gain more control over their interactions with banking products/services – when and where they want to use their retail and corporate banking services. The possibilities offered provide more insight as to what products and services they consume (product perspective) in relation to their bank accounts and from which service providers they wish to buy the respective product or service (distribution perspective). Further, innovation in the field will allow customers to have more influence on the usage of their personal data – an aspect which has come under increasing scrutiny as banks are actively exploring how they can monetise the massive value of data they sit on. 

Open Banking - Build on bank key assets

For banks, Open Banking is a means of responding to this next level of customer-centric approach which is being demanded from them, as consumers get used to 24/7 service and omni-channel service. Through opening up their IT coding and working together with players in the ecosystem, banks have the opportunity to work in a scalable fashion with innovative technologies and players that can advance their respective propositions. Other drivers of Open Banking include the push by regulators for more openness in banking through the revised Payment Services Directive (PSD2) provisions on “access to account” (XS2A) and the General Data Protection Regulation (GDPR, coming into effect May 2018) alongside the rapid extension of the use of Open API (‘Application Programming Interfaces’) technology in the financial services domain.

White paper: advancing customer-centricity

In a bid to help the sector with understanding the potential and impact of Open Banking, the Euro Banking Association (EBA) in 2013 established the ‘Open Banking Working Group’ (OBWG)*. As part of its research series for the community – the group has delivered several thought leadership papers since its launch – OBWG recently released its ‘Open Banking: advancing customer-centricity’ white paper. The study was crafted in collaboration with Innopay, a Netherlands based consulting firm specialised in among others payments and innovation in the financial services space. Innopay’s experts supported the group with key insights, functional expertise and overall project management.

The white paper aims at helping banking professionals understand how Open Banking can serve as an enabler of increased customer control, with much attention given to the role of API technology and digital identity. The paper also explores the strategic implications of the trend for banks, including impacts on product creation and distribution, and provides a synopsis of different roles banks can play in terms of Open Banking maturity. Four levels are identified (integrator, producer, distributor and platform), each level correlates with increasing customer control from a customers’ perspective. 

The white paper comes months after OBWG released its first paper on Open Banking, titled ‘Understanding the business relevance of Open APIs and Open Banking for banks’. The paper helps individual actors understand the key concept of APIs and gives them insight into the key considerations for redefining viable digital business strategies in an open API context.

For more information on the main insights from the ‘Open Banking: advancing customer-centricity’ see below YouTube video from OBWG.

* The Open Banking Working Group was in fact a continuation of the e-AP Working Group, which was rebranded to better reflect the broader open banking agenda which the group pursues.