What the next phase of open banking technology looks like

Bob Schukai

Executive Vice President, Technology Development, New Digital Infrastructure and Fintech at Mastercard

Open banking is a platform for innovation. The fintech industry is growing faster than ever, and a consumer-authorized data access platform will fuel innovation focused on financial inclusion, financial literacy, money movement, and more. of the. The successes of many financial products (for example, the lending services offered by Rocket Mortgage and powered by Mastercard’s open banking offering) demonstrate the value consumers already see in using apps and services enabled by data authorized by consumers.

As we move towards more seamless digital experiences, one of the most important technology advancements will be the universal use of APIs to make direct connections to banks, fintechs, brokerages and vendors. of pay. APIs help ensure the best data through the fastest, most secure and reliable connections, which will lead to increased data sources, data availability and quality, and increased intelligence and agility. in-depth data analysis. Advanced intelligence will provide more personalized attributes and information for loans, payments and personal finance, going beyond just banking to finance more broadly.

The future of open banking is to enable consumer choice through the secure exchange of data, facilitated by infrastructure, applications and services, and localized customer service. Mastercard’s global open banking platform puts consumers and small businesses at the center of where and how their financial data is used and provides efficient, secure and affordable access to the services they want and that they need. Innovation in open banking requires adopting a developer-centric approach and using robust APIs, connectivity and data infrastructure combined with privacy and data security principles to enable all players of the ecosystem.

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David Glaser

President and COO at Dwolla

As open banking continues to advance, fraud threats and security issues will always evolve with the technology behind these ecosystems, and these issues must be mitigated if open banking is to become as widespread in the United States. United than in Europe and elsewhere. From a technology perspective, this could take the form of built-in security protocols added to emerging platforms, such as data encryption, stronger authentication systems, and better data storage hygiene. This could even include the automated destruction or erasure of unnecessarily stored consumer information. With more retail and consumer opportunities and account-to-account transactions, fraud could increase. Fraudsters will try to use new technology systems, so it is important that everyone in the open banking ecosystem uses multi-layered approaches to security. Financial institutions and fintechs can offer limitless innovative products to consumers and businesses, but getting them to participate in these open banking systems requires a collaborative approach to security and standards.

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Devie Mohan

CEO at Burnmark

No commentary on open banking is complete without mentioning data technologies. The open banking framework works well in several regions (Europe, US, India, Hong Kong, South Korea) but data policies and frameworks lag behind.

I would like to see the lag reduced with the adoption of data technologies that support active consent, synthetic data creation (for sandboxing), biometric authentication, and the creation of an API ecosystem . This is especially important when fintechs are actively trying to work with partners in other industries like healthcare, travel, and retail, sharing consumer data through open APIs.

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Penny Lee

Chairman and CEO of the Financial Technology Association

Open banking drives financial inclusion, especially for the 22 million unbanked or underbanked Americans. With open banking, institutions such as community banks, credit unions, community development financial institutions (CDFIs), and minority depository institutions (MDIs) can partner with fintechs to provide organized financial services . This means early access to salaries, overdraft protections, bill payments, money management and more services for consumers. From a technology perspective, fintechs need standardized access via APIs to consumer-authorized data in order to achieve better outcomes for consumers. Legacy systems used by traditional banks cannot communicate well with modern applications. APIs solve this problem by acting as a common set of functions that act as a translator or middleman between providers. They also enable more iterative innovation by leveraging the capabilities of other applications, such as authentication and processing. This particularly benefits small financial institutions with limited resources as well as consumers who benefit from comprehensive and renewable information. Ultimately, parity of access will ensure that fintech partnerships continue to help smaller banks, CDFIs, and MDIs compete in the financial system.

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John Pitts

Global Head of Policy at Plaid

The key to improving open banking technology is ensuring it keeps pace with consumer financial needs and demands. Today, open banking allows consumers to access and share their banking data. But the financial life of a consumer is not limited to his bank account. They deserve open financial tools to let them share the financial data they want, whether it’s with a bank, brokerage, payroll provider, or fintech. With almost a third of Millennials saying their main checking account is with a fintech, the need for open financial technologies that provide more consumer choice and accelerate innovation is clear.

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Find out who’s who in Protocol Braintrust and browse each previous edition by category here (updated March 9, 2022).

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