By Steve Barrett, Senior Vice President, International Operations at Delphix 

The financial services (FS) sector is currently undergoing a massive transformation. With the adoption of new digital habits, consumers expect greater convenience, choice, and flexibility in their banking relationships. At the same time, concerted regulatory pressure to encourage innovation and drive competition in banking has accelerated FS organisations’ investment in Open Banking initiatives worldwide. The race to leverage customer data and deliver superior next-gen services and experiences is on.

But there is a problem. The vast majority of FS organisations are failing to comply with mandates such as the EU PSD2-SCA  and meet the enforcement deadlines. In fact, according to recent research from Delphix, only 3% of FS firms are confident they are prepared for the next major Open Banking enforcement deadline, due in September 2021— despite a two-year enforcement delay.

Whether it’s challenges related to data privacy, compliance or a lack of resources and skills, FS organisations need to overcome the hurdles currently impeding the Open Banking revolution. It is only then that they’ll be able to enter a new age in digital banking.

Key barriers to open banking

Open banking has the potential to revolutionise financial services. Connecting banks, third parties and technical providers – enabling them to share authorised data – will bring more competition and innovation to the sector, which, in turn, will lead to better products and services. For customers, it will bring more choices and better experiences. For FS organisations, there will be new revenue streams and a sustainable service model which will enable them to keep up with the new entrants to the market, including rival neobanks and startups.

But using data for innovation can be challenging because it often exists across many disparate systems, siloed throughout a business in different departments. This makes it extremely difficult to safely, efficiently and effectively deliver it to those who need it to glean any valuable insights or drive new projects. Broad reliance on legacy infrastructure and core banking systems in need of modernisation compound this issue.

Effectively accessing and utilising data for innovation becomes even more challenging when you add privacy and compliance concerns into the mix. In fact, 62% of FS firms cite protecting sensitive data across multiple systems and APIs as the biggest data privacy and compliance challenges. Without access to a steady stream of fresh, compliant data for the development and testing of APIs and new apps, FS organisations risk losing ground in transforming the industry. In addition,  they may face hefty fines associated with non-compliance of Open banking regulations across the globe.

While FS organisations need to protect sensitive data across multiple systems and Application Programming Interfaces (APIs), they also need to ensure their compliance measures do not limit access to data and preserve its quality and usability. It’s a fine balance and one that is difficult to get right, with the majority of FS firms (92%) predicting that their organisational operations will be disrupted as they begin to roll out Open Banking APIs. However, there are ways to boost their chances of success.

Opening the door to better banking

Traditional test data management tools are simply not up to the task of wrangling data from across a multi-generational technology stack. Instead, they make it challenging for enterprise teams to achieve integration testing whilst maintaining compliance. This is why FS organisations need to turn towards DevOps as a means of delivering compliant data at speed via an API-driven data platform.

An API-driven platform that combines data delivery and compliance across multi-generational systems could automate, scale and optimise testing while mitigating compliance risks. Such a platform would reduce the latency arising from an inability to find and protect sensitive data and deliver and refresh environments—for dev-testers working on APIs and new banking products—while boosting productivity and time to market.

One company already leading the way by combining data compliance with on-demand delivery is BNP Paribas. The leadership team wanted to facilitate the use of data to increase productivity and performance. Adopting an API-driven platform, BNPP managed to radically accelerate  the delivery of environments, so development and testing teams across the globe could increase AI projects going into production three-fold and accelerate cloud adoption. This project has improved software quality, reduced downtime, and slashed the time to launch its open API marketplace. All this has been achieved whilst maintaining compliance.

In the first six months of 2020, the number of users of open banking-enabled apps or products in the UK doubled, and by February 2021, it had grown to over three million. There is no doubt that Open Banking is the future of finance. In order to stay ahead of the curve and thrive tomorrow, FS companies need to act today. Implementing an API-driven data platform will enable those working in the sector to unlock the power of their data and step into the Open Banking revolution.