38 MAY / JUNE 2023 As the financial services landscape evolves along with customer expectations, open banking can position institutions for the future and allow them to respond to those changes, with technology partners assisting them along the way. Open banking allows third-party technology developers (like a core technology vendor or specialized fintech) to access a bank’s data and provide it with specialized products. Banking data is no longer confined within an institution’s walls. With open banking, financial data and capabilities are everywhere. Exploring Open Banking While confusion may exist over the terminology, open banking is an umbrella term that encompasses every banking use of Application Programming Interfaces (APIs) to share data. This software is familiar, and some banks may be surprised to learn that although they haven’t referred to their practices as open banking, they’ve embraced the model for years. Open banking APIs enable many different services through bank data exchange, including financial services like payments and account management, embedded credit score ratings, onboarding identity verification and many more. In short, they enable the digital banking services that today’s customers expect while simultaneously adding technology to aid employees with backend processes. The most common open banking strategy is banking as a platform, also known as platform banking. This model involves a financial institution connecting new technologies (typically from its core technology provider) to its central enterprise core technology. Banking as a Service (BaaS) is another open banking Open Banking & the Future of Financial Services application that has recently gained steam. BaaS uses the foundation of open banking to enable banks, their core vendors and a nonbank organization (often a fintech) to create new financial products or provide financial products in new environments. Neither platform banking nor BaaS are synonymous with open banking. Instead, consider each of these models as an example of what open banking can do. What Open Banking Offers Financial Institutions In today’s competitive landscape, financial institutions must be flexible and adaptable. Open banking offers financial institutions adaptability, enabling them to: % Incorporate new technologies – Financial institutions may not always have the time or resources to build new digital products, so connecting with a technology provider helps them more easily “plug in” new offerings without needing to develop them internally. Transforming the core into an upgradeable platform also enables institutions to add modular features like video chat, digital account opening or real-time transfers much faster. % Consolidate and use data – APIs create a “universal language” to share data, which can connect all banking systems and processes in real time. With centralized behavioral and transactional data accessible by CRM and analytics dashboards, institutions can better determine customer needs and even use journey mapping to determine where potential customers are lost. % Automate backend processes – By consolidating data from previously disparate systems, financial institutions eliminate dual data entry and gain time to focus on customers. In addition to decreasing the OPERATIONS & TECHNOLOGY Shanda Purcell Sr. Director – Open Banking CSI Shanda.Purcell@ CSIweb.com Computer Services Inc. (CSI) is an associate member of the Indiana Bankers Association.
RkJQdWJsaXNoZXIy MTg3NDExNQ==