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Open Banking: are UK networks fit for purpose?

Open Banking: are UK networks fit for purpose?

By Ian Waters, Director of Solutions Marketing, ThousandEyes

Ian Waters

Ian Waters

The financial sector is leaps and bounds ahead of many other industries in its adoption of technology and pursuit of innovation. In fact, research has found that the recent surge in fintech ventures saw the UK’s financial services firms register a record number of trademarks in the last year. What’s more, the London Mayor’s office has released new data suggesting that this year is set to close with record-breaking levels of investment fuelling British fintech companies; far outstripping the capital’s European counterparts.

Much of the investment in fintech has of course been in anticipation of the new Open Banking regulations, which will increase competition and further accelerate the digital transformation of banks by allowing more information to be exchanged across networks. To achieve this, traditionally private and segregated bank networks must be made available to the Open Banking eco-system, the newer breed of which are operating on cloud based services.

It is inevitable for any organisation to engage outside of an owned private network. Companies must be connected to third parties today – for access to more agile infrastructure, to offer additional services via APIs or simply to reach customers where they prefer to engage. Open Banking simply escalates the dependence on hybrid networks, incorporating the public internet and the cloud. Public APIs allowing third parties access to a company’s data and services – as well as potentially the private customer data they hold which is used to enhance the customer experience – all increase banks’ exposure beyond their own internal, secure and managed networks. With this in mind, what are some of the major considerations that financial services companies must address when operating across both public and private networks?

  1. Visibility across all network infrastructure – the increased reliance on networked services means that fintech and finserv firms require more precise and active network visibility. This is to troubleshoot performance issues and resolve them before they impact users or the business. Traditionally, monitoring solutions have only looked at owned network infrastructure, but today’s landscape means public networks such as the internet and cloud provider networks are crucial too.
  2. Rapid response to issues – creating a financial ecosystem through myriad services connected via APIs can present a significant challenge when performance issues, such as a major outage in one of these services, occur. For most finserv companies today, identifying where the issue lies is approached as a process of elimination. Bringing together20-30 different parties on the phone to identify the source of an outage, for example, adds complexity and time. Time that a customer-facing organisation simply can’t afford. We’ve all seen headlines that showcase the detrimental impact an outage has on the reputation of a bank when customers can’t access vital services. ThousandEyes has found that by minimising time spent trouble-shooting – using visual analysis tools to quickly and easily locate outages and issues regardless of where they occur – means that rather than focusing on finding problems, teams can focus on fixing them in minutes instead of hours, or even days.
  3. Building in rapid scalability and agility of networked services – all parts of the network must be able to meet demand, and this includes third-party services. Cloud-based providers can give finserv companies the ability to increase efficiency of infrastructure and quickly offer more competitive, innovative services to their customers. However, due diligence must be carried out to ensure that these new providers have a performant infrastructure. Otherwise, they risk creating a weak link in the digital supply chain of services that has the ability to disrupt both user experience and business continuity.
  4. Rethinking private networks – innovation of services and opening up the IT environment to third parties can place demands on existing private networks that may not be optimised to handle the strain and stress of cloud. Having visibility into the performance of existing networks and (re)configuring them to be optimised, in architecture and capability, is a major priority for this new reality.

While there are several considerations to proactively address in this new era for financial technologies, it’s clear to me that the rise of cloud computing and a more open infrastructure will happen on its own – irrespective of Open Banking. App-only and mobile-first banks such as Monzo, Monese and Starling have experienced customer adoption and fast growth thanks mainly to an improved user experience. There is no doubt that the innovation and investment in new financial technologies will drive the whole industry towards a better outcome.

However, the heavy reliance on cloud networks could leave financial services companies more vulnerable. Outages at some of the start-up banks, most notoriously Monzo, also demonstrate the serious consequences and barriers to adoption that weaknesses in a network can have. This must be a genuine concern for those backing the ‘open banking revolution’. By addressing the points outlined above, however, banks and other financial services companies will ensure that they mitigate the risks and enjoy the rewards of a more innovative and satisfactory offering for their customers.

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