by Spencer Nguyen • January 3, 2022
There is simply no other industry in the world like banking. In addition to dealing with and handling large amounts of financial data, this industry also places the highest priority on security concerns and measures. For businesses using an open banking platform strategy, APIs present a safer, smarter, and better way to do banking and business. The future of banking is here, and it is the open banking platform. This new banking platform strategy also means traditional banks and new banking institutions must keep up.
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The success and movement of open banking platform strategies have been well-documented. There has also been a notable increase in the number of banking institutions and financial organizations choosing to venture into the arena of open banking platform strategies.
Much of the exploration, including the continued success of open banking strategies, has been powered by APIs. Standing on the shoulders of the most secure technologies, businesses like DreamFactory create APIs that empower, enable, and promote open banking platform strategies.
Banks and financial institutions are also moving toward open banking platform strategies for many reasons. Open banking platforms lead to more customers and greater opportunities through the increased visibility and accessibility afforded by APIs. Additionally, APIs also offer easier, smarter, and faster banking processes. Contact DreamFactory to learn more about how APIs can empower a new open banking platform strategy for you.
Banks and financial institutions have a few options for the type of open banking strategy they choose to employ. In many cases, it isn’t a single open banking strategy but a combination of different open banking archetypes.
There are two categories of API options (continuing and exposed) for open banking strategies. Here is a look at the open banking platform strategies, the applicable API categories, and how APIs are changing the face of banking today.
This banking option uses APIs in what is considered a continuing manner. Financial institutions that opt for the Banking as a Platform open banking strategy provide their own core services. This open banking platform uses APIs to offer (broker) external services.
This open banking platform also enables banks to work with third-party providers for options like revenue-sharing and other investment choices. Along with supporting the banking ecosystem, this banking option also opens up an additional means of revenue for banking and financial institutions.
The enhanced banking platform was developed to respond to the rise in third-party providers in the banking industry (often API-powered). This is the other category of continuing APIs, again meaning the core services are still maintained and provided by the banking institution.
The enhanced banking platform was created to take advantage of those new API-driven third-party provider tools. Banking customers will also recognize the advantages and changes to the user experience as a result. This open banking platform provides customers with a hyper-personalized experience via its partnership with other third-party APIs.
Banks considering an open banking platform strategy are encouraged to contact DreamFactory to get the expertise, APIs, and support they need to take the next step. Banks and financial institutions that opt for the enhanced banking platform can also work as their own third-party provider. This is another area where Dream Factory can help by connecting with all common databases and file storage systems to generate, secure, and deploy an API in minutes.
This type of open banking platform strategy falls into the exposed API category. In the compliant banking open banking platform, third-party providers are granted access to information and given various authorities. This also includes access to customer services and data.
While this type of open banking platform strategy comes with obvious concerns, it is arguably the more secure type of API categorization in the new world of open banking. That is because these APIs and providers must meet a litany of standards and go through a thorough compliance check.
The DreamFactory team also realizes that securing APIs is difficult and time-consuming. DreamFactory makes it easy with tools like user management, SSO Authentication, JSON Web Tokens (JWT), CORS, Role-Based Access Control on API endpoints, record-level permissions on data, and more. Contact DreamFactory to discover how to better protect your financial institution and data.
Banking as a Service is undoubtedly the most open of all the open banking platform strategies because it gives third-party providers access to a bank’s core services.
Due to this open banking structure, this platform typically works with only premium and proven APIs. The primary benefit of this type of open banking platform is that it offers the opportunity to leverage the benefits of third-party API providers in real time. This particular open banking platform system has experienced considerable success in Spain and Germany.
If you are want to learn more about the open banking platform strategy or if you want to take steps toward using open banking platform options for your business, DreamFactory can help. Open banking isn’t a new way of banking, only a smarter, more flexible, and easier way to do banking, for everyone. Start your free 14-day free trial with DreamFactory to discover how a top API platform can improve your business’s technology.
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