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(This post was updated on March 5, 2019 to include new information.)
Many banks are striving to be more agile in their operations, their business practices, and even in their ability to innovate to deliver new products and services. With greater agility, banks can better meet the demands of today’s digital-savvy customers and excel in an increasingly competitive market. Initiatives like open banking can help facilitate that agility.
Open banking uses open application programming interfaces (APIs) for third party developers, gives users greater transparency, and provides a model for the use of open source to build out solutions. We think that agile integration – bringing together containers, distributed integration, and APIs – is the best path to deliver open banking.
When done correctly, agile integration has the potential to deliver greater infrastructure flexibility.
As traditional banks venture into open banking, their leaders should continue to pay attention to the need for compliant and more secure end-to-end services. After all, they’ve had a long history of living up to regulatory compliance standards and they tend to know about protecting their customers from fraud – especially now that increasingly sophisticated cyber-attacks and growing numbers of endpoints can pose greater risks than ever before. But executives at financial institutions also want to offer innovative and feature-rich client services that consumers will expect to be part of their "every day and everywhere" banking experiences.
Developers will be at the front line supporting these efforts, and they’ll need to leverage APIs as a key component of agile integration. How? First, developers should be able to rely on APIs that can provide strong security and authorization rules to find and use approved internal or external services. These APIs will be the building blocks for their projects, and they’ll be the vehicle, so to speak, that takes the data coming from multiple channels to refine new applications. Being able to break down the barriers to share data from diverse sources across cloud and virtual environments can be a formula for success in this new era of financial services, and in places like the United Kingdom, the Open Banking Standard requires the largest banks provide approved third parties direct access, via APIs, to their data, down to the level of account transactions. Similarly, the European Union’s revised Payment Services Directive, known as PSD2, is promoting the development and use of innovative online and mobile payments through open banking and requires data sharing with end customers. This too means banks will have to share APIs with third parties that give them access to the banks’ back-end data.
Developers should be able to work with APIs in a fully customizable, self-service developer portal, too. That may be critical for providing an excellent developer experience. For example, our partner Tesobe is leading The Open Bank Project, an initiative designed so financial firms can expose open APIs and can connect with a global community of fintech developers to build modern digital banking services. Integrated with Red Hat Fuse and Red Hat OpenShift, the Open Bank Project is designed to give financial institutions a flexible platform to innovate and access to APIs used by a global developer community.
They also should be able to integrate REST APIs that conform to the OpenAPI specification with banking APIs that also adhere to the standard. REST – Representational State Transfer – is a design architecture that focuses on resources for a specific service and their representations. That integration lets developers who are spread across different agile teams collaborate and share services to create new and innovative offerings. And developers should have the ability to deploy and scale APIs within container platforms that can be hosted in more secure and scalable hybrid cloud environments.
What’s equally important to using APIs, of course, is to be able to manage them. That will be especially important as use cases grow and APIs expand their roles in agile integrations.
Red Hat’s Role in the New Financial Services Ecosystem
As a member of the Fintech Open Source Foundation (FINOS), a nonprofit organization promoting open innovation in the financial services community, Red Hat is dedicated to helping build the programmable banks of tomorrow. Our OpenShift technology already provides the underlying technology for FINOS’ Open Developer Platform (ODP).
These workshops offer a combination of executive seminars and hands-on technical labs. Whether you are just starting your journey or looking to improve what you already have this workshop can help you:
Understand the full customer possibilities of open banking.
Why you need more than APIs.
How to use key technologies to move your open banking strategy forward faster.
About the author
Eric Marts is a financial services leader at Red Hat. Prior to joining Red Hat, Eric shaped solutions globally in the Retail Banking and Wealth Management business at HSBC. He has more than 20 years of professional experience across both startups and incumbents. He is particularly interested in unlocking new market opportunities and making financial services simpler and more inclusive for customers with cloud technology.