The first post in this series (https://hortonworks.com/blog/banking-innovation-uk-open-bank-project/) discussed the emergence of the Open Bank Standard Working Group (OBWG) in the United Kingdom. The goal of this standard is to encourage the open and secure sharing of banking data among providers – via open APIs- thus providing more banking service choices for consumers.
Open Banking Standard will spur immense industry changes..
The Open Banking Standard (OBS) represents a vast opportunity for banking organizations in multiple ways. First off, Bank IT has the luxury of using the regulatory mandate to slowly re-architect hitherto inflexible and siloe-d business systems. Secondly, doing so will enable Banks to significantly monetize their vast data resources in several key business areas.
This will need to change with the introduction of Open Banking Standard. Banks that do not change will not be able to derive and sustain a competitive advantage. PSD2 Compliance (Payment Systems Directive – 2) – which will be mandated by the EU is one of the first layers in the OBS. Further layers will include API standards definitions for business processes (e.g View Account, Transfer Funds, Chargebacks, Dispute Handling etc).
The OBWG (Open Banking Working Group) standards include the following key constituencies & their requirements  –
1. Customers: defined as account holders & businesses who agree to sharing their data & any publishers who share open datasets
2. Data attribute providers: defined as banks & other financial services providers whose customers produce data as part of daily banking activities
3. Third parties: Interested developers, financial services startups aka FinTechs, and any organizations (e.g Retail Merchants) who can leverage the data to provide new views & products
The five business implications of Open Bank Project –
Open Banking Standard will spur business immense changes..
Prior to the Open Banking Standard, Banks recognize the need to move to a predominantly online model by providing consumers with highly interactive, engaging and contextual experiences that span multiple channels—branch banking, eBanking, POS, ATM, etc. Business goals are engagement & increasing profitability per customer for both micro and macro customer populations with the ultimate goal of increasing customer lifetime value (CLV). The Open Banking Standard brings technology approaches to the fore in terms of calling it out as a strategic differentiator. Banks need to move to a fresh business, data and process approach as a way of staying competitive and relevant. Done right, Open Bank Standards will help the leaders cement their market position.
The Open Banking Standard will also steward the development of layers of guidelines (API interoperability standards, data security & privacy and governance) which primarily deal with data sharing in banking. The belief is that this regulation will ultimately spur open competition and unlock innovation. For years, the industry has grappled with fundamental platform issues that are native to every domain of banking. Some of these include systems are siloe-d by function, platforms that are inflexible in responding to rapidly changing market conditions & consumer tastes. Bank IT is perceived by the business to be glacially slow in responding to their needs.
The next post will delve into the key portions of the standards and the downstream IT implications.
 The Open Banking Standard –
Big Data – Banking’s New Weapon Against Financial Crime – http://www.vamsitalkstech.com/?p=806