With the proliferation of API availability from fintech organizations, and also banks and bank processors, financial services are becoming more accessible to more consumers through more venues. But only to a point. A column in ITProProtal, talks about how this concept of open banking, fueled by the availability of APIs for financial services and data may change banking. This is all playing out in the UK under the auspices of PSD2:
The Open Banking directive from the Competition and Markets Authority (CMA) has called on banks to make some of their data available as of 2018, so that customers can easily compare what is offered by different banks, and third parties and multiple finance firms can use it to recommend alternative services. The objective is to encourage innovation and accelerate technological change in the UK retail banking sector and it certainly represents a major shift for financial institutions in the way they will manage, consume and share mission critical data. Ultimately, APIs are the key component to facilitating this revolution, allowing access to data with a user-friendly interface, without having to alter the back-end of the business.
Being able to share product data for purposes of comparison shopping in one thing. But sharing personal account data on purpose, not through fraudulent activity is concerning. The industry hasn’t shown that it is ready to protect to ecosystem:
The UK’s nine largest banks are not expressing huge enthusiasm about the changes. They have been given one year to develop and adopt Open Banking APIs, and they have expressed a number of concerns: the top three being security, project failure and timescales. Security is the most significant: confidential banking information is hugely valuable and hackers will undoubtedly be looking for any weaknesses in the cryptographic keys that could allow them to gain access to bank accounts and the banks’ servers
Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group
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