Page 41 - Banking Finance August 2019

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they invite developers and encourage them to build through an Application Programming Interface ("API") that
solutions on top of the Bank's APIs. Startups like Happay, is made available in conjunction with the banks, and would
GoNiyo Zeta and other has partnered with banks such as be compliant with the government's regulatory and
RBL Bank and Yes Bank to offer expense management technical standards.
and one-click generation of prepaid cards and a single
dashboard for expense management. By opening up their In short, Open Banking has been designed to prevent
APIs, other banks can also enable their customers to avail fraudulent companies springing up and putting consumers
their services or they risk losing customer deposits to other in a position where they can request and receive access to
banks. financial information. In most instances, third parties that
use Open Banking data will not be able to access the data
By leveraging secure API gateways and layered permissions directly - they will merely be a conduit through which it is
settings, privacy and security concerns can be alleviated analysed and displayed to the customer.
since the primary authentication will remain with the banks
and information is shared only with the explicit permission It is also worth noting that Open Banking is not based on
by the customer during the authentication process. blanket use of personal data. Access to data is both time-
limited and limited to the minimum amount of information
Security concerns: required to service the user. Speculation about widespread
It is only natural that in the existing climate regarding data hacking and data breaches is also obscuring the fact that
and it's uses, for there to be some reservations about the Open Banking presents a huge opportunity to consumers
prospect of sharing data with "third-parties". This concern and businesses alongside the existing banking infrastructure.
seems well founded particularly when the data in question
if the highly sensitive financial information of the consumer. Conclusion
However, the reality is that any such fintech company, app Open banking will open the door to a range of great new
or service would be required to pass rigorous security and financial technology, in a choice of services and products
compliance procedure, including regulatory licensing, in that are bound to have profound and favourable implications
order to access such information. This entire licensing for all of the stakeholder's involved. And, as with any
process would be overseen by relevant government bodies technological revolution, it is only natural that there is a
such as the RBI in India, including others, which results in
degree of uncertainty. However, as consumers and banks
these companies having a level of security akin to banks and begin to see the benefits, and as the security apparatus
other financial institutions.
around Open Banking does its job, any fear of hacking or
fraud will soon dissipate.
Consumers also need to explicitly provide permission to a
third party for that company to access data. This is not a References
free-for-all of companies tricking people into handing over
https://www.accenture.com/_acnmedia/Accenture/
their most sensitive information. Access would be granted
Conversion-Assets/DotCom/Documents/Global/PDF/
Dualpub_11/Accenture-Future-Fintech-Banking.pdf
https://www.forbes.com/sites/tomgroenfeldt/2013/11/12/
banks-could-lose-35-percent-of-customers-by-2020/
#6a9a4e966417
https://www.accenture.com/gb-en/blogs/blogs-open-apis-
reimagining-retail-banking
https://ec.europa.eu/info/law/payment-services-psd-2-
directive-eu-2015-2366_en
https://www2.deloitte.com/content/dam/Deloitte/in/
Documents/financial-services/in-fs-fintech-india-ready-for-
breakout-noexp.pdf

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