Is Open Banking Doomed?
Test and Monitor | Posted March 14, 2018

For years, financial institutions were revered as conservative, predictable, and stable. Until chaos erupted in 2008, and Since then, the demand for transparency and increased consumer power has boiled abruptly to the surface, requiring financial institutions to move quickly and effectively to appease consumer and market needs. However, in an increasingly digital environment, longstanding institutions such as financial companies, struggle to adapt as rapidly as the world around them.

This year, there’s a lot of talk around the Open Banking Standard, an initiative  set to address consumers concerns for more transparency and more options when choosing banking services and providers. Under the Open Banking Standard, banking data is shared through secure open APIs to promote consumer control and lower barriers of entry into a market that historically has been difficult to break into. Many are praising this initiative as the first step in helping catalyze a change in the financial industry, as the pace with which it has moved in the past has been quite slow.

In a panel of over 100 global financial services leaders, the most important retail banking trends - removing friction from the customer journey, leveraging big data, AI, advanced analytics and cognitive computing, and improvements in multichannel delivery – have remained the same over the last year. The Financial Brand points out that this may be indicative of a bigger problem – the lack of urgency to change and the inability for firms to differentiate themselves in a modern market.

So How Does the Open Banking Initiative Help Fuel Digital Change?

Sharing data via APIs offers a plethora of new way to interact with banking data, which in the past has been a relative black hole to external consumers. By empowering innovation and creativity with the use of this data it not only opens the door for new companies, but it also puts pressure on current companies to change their current, antiquated workflows to support the needs of the market.

It is not a revolutionary idea to rely on APIs to help push industries into the modern digital world. Retail industries all over the globe are leveraging APIs to connect legacy systems, create new omni-channel experiences, and to engage with consumers. For banking industries this creates a similar opportunity, one with which they can tackle the top trends fairly easily than what would have been required without the use of APIs.  APIs help transform aged processes without necessarily upheaving the current, dated infrastructure that financial institutions were built on.

What’s the Caveat?

While this initiative strives to bring financial institutions into the world of open innovation, exposing this data can create new challenges. The most common are security risks, like the potential for malicious third-party apps to access account data. But one that everyone seems to sleep on, is the importance of monitoring the APIs used to build the foundation for these new technological innovations.

Why Does Monitoring Matter?

APIs are great, but like all things, unexpected blips can happen. APIs can be unavailable, they can behave differently in production than they did in test environments, they can be slow or return the wrong information. Understanding their performance, availability, and correctness, especially when applications rely on them to transmit vital information, is critical to actually delivering a great user experience. With so many banks implementing APIs as a way to revolutionize their customer experience or gain more visibility for the services they offer, monitoring these APIs should be of upmost importance.

  • APIs are the lifeblood of many applications
  • APIs can behave differently in production than in a test environment

    • Availability
    • Performance
    • Correctness

  • Monitoring can help identify and remedy issues before users encounter them

To capture and deliver the value that Open Banking offers, its vital to monitor the APIs new innovations rely on.  To learn more about how you can better understand your API performance, checkout our guide to Unlocking the Business Value of APIs.

To learn more about Open Banking, see us in Copenhagen at APIs for Banking and Fintech with Nordic APIs to hear Anand Sundaram speak about Open Banking with API Driven Development.


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