Top 8 Tips for Banks and FIs to consider when implementing Open Banking

When considering the right approach to deliver open banking APIs, either to comply with regulations and/or to unlock the potential of new revenue streams through account information and payment initiation services, banks should consider several aspects to ensure a successful implementation:

  1. Follow a standard: Whether there is regulation that dictates a standard or not. Following a standard is the most future proofed and cost effective way to deliver. In some markets the standards have been designed specifically to meet the requirements of regulations like PSD2, and even create the space to go beyond and deliver premium APIs, like in the UK and in the Kingdom of Saudi Arabia.

    💡The Ozone Tip:
    Did you know that there are over 20 Open Banking Standards in use globally and they continue to change and evolve regularly? Following a specific standard is essential when implementing open banking APIs – even if you operate in a market where open banking regulation is not yet mandated. These standards have been designed to ensure strong security and to reduce the risk of data breaches and following a standard will significantly reduce effort  when regulation does kick in. 
  1. Strong customer authentication (SCA): Implement SCA methods, as required by regulations like PSD2, to provide secure authentication for customers accessing their account information or initiating payments. SCA is based on multi factor authentication and can be delivered using methods like biometric authentication, one-time passwords (OTP) and hardware tokens.

    💡 The Ozone Tip:
    Whilst Strong customer authentication is all about delivering a robust, secure and trusted approach, it is also a critical part of delivering a great user experience. Frictionless SCA can be delivered through app to app experiences using biometric authentication (e.g. Face ID). But there are a number of authentication options to support different use cases, for example; web-based, decoupled (authenticating on a different device), multi level authentication (for corporate use cases).
  1. Consent management: Develop a robust consent management process that allows customers to grant, and easily revoke consent for third-party providers (TPPs). This needs to be fine grained to support the widest range of use cases, enabling granular consent to access their account information or initiate payments. For example single payment versus variable recurring payments (VRP) with defined control parameters.

    💡 The Ozone Tip:
    Providing a consent dashboard in your mobile and internet banking can provide customers with complete transparency and control for all of their third party relationships. 
  1. Developer Experience is as important as user experience: Your API channel will be a key channel for building partnerships, accelerating innovation, creating new revenue streams and supporting your customers.  Consideration of the developer experience is therefore critical. Follow best practices and industry standards for API design, ensuring consistency, simplicity, and ease of integration for TPPs. Provide comprehensive documentation and support to facilitate smooth integration with third-party services.

    💡 The Ozone Tip:
    A well structured developer portal with “How to Guides”, FAQs, sample code and training wheels for developers can also significantly reduce the amount of support required by third parties.
  1. Security and data protection: Prioritise strong security measures, such as encryption, secure authentication, and access controls, to protect customer data and maintain trust. Regularly monitor and assess the APIs for potential vulnerabilities and promptly address any security issues.

    💡 The Ozone Tip:
    The Financial Grade API (FAPI) from the Open ID Foundation has become the defacto security protocol between most of the mature global open banking standards. FAPI has evolved over recent years with different versions used in markets like the UK, Brazil, CDR in Australia and Saudi Arabia. FAPI 2 will be arriving soon.
  1. Scalability and performance: Ensure that the APIs can handle high volumes of requests and scale effectively as the number of third parties and users grows. Monitor API performance and address any bottlenecks to maintain a high level of service quality. 

    💡 The Ozone Tip:
    Cloud based solutions provide auto scaling to deliver an efficient, yet effective way of dealing with high volumes. Peaks of usage should be expected as many TPPs pull data in batches at certain periods in the day.
  1. Monitoring and analytics: Implement monitoring and analytics tools to track API usage, performance, and potential security threats. Use this data to make data-driven decisions, optimize API performance, and enhance the overall user experience.

    💡 The Ozone Tip:
    Pre-packed regulatory reports will be required in some markets and granular monitoring of activity by third party will be essential as you start to monetize premium APIs.
  1. Collaboration with TPPs: Engage with TPPs, fintechs, and other stakeholders to foster a collaborative open banking ecosystem. Establish clear communication channels and provide resources and support to enable the development of innovative solutions based on the bank’s APIs.

    💡 The Ozone Tip:
    Partnering with innovative third parties can be like a fast moving, low cost extension of your own product development. Through delivering premium and value adding APIs TPPs will become a route to drive new revenue streams and ensure your products and services are embedded in third party experiences creating a whole new channel to grow your business.

We’re helping banks around the world get this right and the Ozone API supports all global standards. Get in touch to talk to one of our open finance experts and find out more.

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