The robust client authentication is a must for being adopted for making the open banking to triumph.
The core initiative for which open banking was devised was for powering out the financial services innovation. Where earlier only the banks were permitting their clients to view in their accounts via their own banking website or via mobile app, the modern era Open Banking currently services the banking arena to make this data available via any collector that aids in connection to it, as well as offering client control over their data as well as their finances.
This has really offered huge wealth out for the latest banks, services as well as emerging ecosystems for offering out to the client’s huge option for whom they utilize for their financial services. It also offers banks direct access for innovative services as well as potential better clients as well as channels.
The Open Banking although is having undeniably a huge positives reflection for both the clients as well as financial institutions, it potentially does commence out 1000s of other unsecured digital channels and thus data can be at times manipulated.
There are numerous Open Banking enterprises that is prevailing within the GCC territory, however, except for Bahrain based regulators, who have not yet commenced out to shape this trendsetter.
The most triumphant territory that has significantly contributed in terms of the optimal utilization of Open Banking is European Union, that has pioneered its path with their law-making approach, for levelling out the playing field as well as upsurging the competitive market, thus building out better flavour for the Open Banking which is almost prescriptive as well as powered via standards. Comparatively, the US has incorporated market-powered approach that has viewed in implausible revolution however, perhaps a less dependable standards approach.
Bahrain has familiarized protocols that specified the embracing of Open Banking by all retail banks and offered them six months to observe. Every bank has unearthed up its application programming interfaces (APIs), making the client data entirely accessible.
In Saudi Arabia, the Central Bank has familiarized an Open Banking policy to progress the innovation within the financial services sector. The nation aims in for Open Banking to go live in the initial half of 2022.
In 2018, one of the UAE’s leading banks, the Emirates NBD, partnered with Virtusa to progress a cloud-based, gamified open banking sandbox. The sandbox empowers creators and FinTechs to create and publish API applications. It is anticipated that this project will bring viable merchandize to market.
Here are some of the key remarks of Open Banking and the progress of SCA in Europe.
- Open Banking voyages are all composed through redirect flows where clients are returned to their bank login page or banking app for authentication when they require to approve access to account data or initiate a payment.
- Conventional authentication approaches such as usernames as well as secured encrypted password or even SMS OTP provides considerable friction, effect the client experience and are unfavourable to the positive adoption of Open Banking.
- European regulators, banks and solution providers were already working together to formulate a clear and unified vision on SCA adoption before the Covid-19 pandemic forced consumers almost exclusively ‘online’.
- This development has emphasized further the pressure on banks and businesses not only to warrant authentication is scalable and secure but to move beyond a username, password, and SMS OTP to avoid user frustration/cart abandonment and reputational damage. SCA is well on its way to being implemented.
A supervisory-led combined tactic will be the triumphant factor to safeguard SCA ropes Open Banking as part of the broader digital transformation agenda and Covid-19 curbing in MENA.
