Tourist e-Wallet and Digital Dirham: Great Potential but Significant Challenges
To meet the operational demands of the digital economy and enhance the efficiency of payment systems, the Central Bank of the UAE (CBUAE) has introduced the national digital currency, the Digital Dirham. Recently, the CBUAE discussed four potential use cases for the Digital Dirham, with the development of an electronic wallet for tourists being a particularly prominent topic. The CBUAE recently released the Digital Dirham Primer, a policy report outlining the design principles, policy framework, and initial development steps for the Digital Dirham. In addition to highlighting benefits, challenges, and implementation processes, the report details four use cases for the digital currency, including: Among these, the concept of an electronic travel wallet for tourists has garnered significant attention, given that the UAE attracts millions of international visitors annually, who collectively spend vast amounts on accommodation, shopping, dining, and entertainment. Theoretically, even if just 10% of tourism spending shifts to the Digital Dirham wallet, it could create a substantial economic impact and promote the adoption of the digital national currency. However, launching a tourist e-wallet is not as simple as introducing it to the market and expecting adoption. Most tourists in the UAE rely on Apple Pay, Google Pay, international credit/debit cards, or digital wallets from their home countries, such as UPI (India) or Alipay and WeChat Pay (China). For tourists to adopt a new payment method like the Digital Dirham, it must offer superior value and address inconveniences that existing infrastructure fails to resolve. Key considerations include: The electronic travel wallet scenario is a complex challenge involving multiple factors, including user experience, cost, widespread payment acceptance across various locations, and integration with diverse payment methods. If these elements are effectively addressed, capturing 10% of the tourism spending market share is entirely feasible. Banks and wallet developers must carefully strategize to turn this potential into tangible success.
Establishing Digital Trust in Banking
As digital services continue to grow, user expectations for security and data privacy are rising. Digital Trust has become a competitive advantage in banking, where financial institutions must not only deliver services but also demonstrate reliability in protecting customers’ personal data, assets and privacy. What is Digital Trust? Digital Trust is the confidence customers place in an organization’s ability to protect data, ensure secure transactions, and comply with regulations. It extends beyond mere trust in a business to include confidence in technology, data management, operational transparency, customer service, and adherence to fair, lawful practices. For example, Public Key Infrastructure (PKI) provides a foundation for secure digital identity, document signing, data encryption, and timestamping—core elements for a secure and reliable digital experience. Broadly, adopting PKI is part of building Digital Trust, reinforcing customer confidence in an organization’s ability to safeguard data, comply with laws, and operate transparently. The Importance of Digital Trust in Banking Digital Trust is critical for financial institutions, as banks handle vast amounts of sensitive information daily, from personal data and transaction histories to financial assets. Strengthening Digital Trust enables organizations to: The Core Pillars of Digital Trust in Banking To build robust Digital Trust, banks must focus on six key pillars: security, transparency, privacy, data integrity, ethical technology use, and regulatory compliance. Each pillar plays a critical role: Protecting customer data from unauthorized access, cyberattacks, and fraud is paramount. Banks should adopt modern security technologies, such as: + Data encryption + Multi-factor authentication (MFA) + Biometric authentication (fingerprint, facial recognition) Privacy goes hand-in-hand with security. Banks must minimize unnecessary data collection and sharing while empowering users with transparent, understandable privacy policies and control over their data. Customers must know how their data is used, who has access, and what safeguards are in place. Transparency—from clear privacy policies to timely communication of changes—builds trust. In case of breaches, banks should have response mechanisms in place, including timely customer notification, damage control, and fair compensation if needed. User-friendly and secure authentication is essential for trusted digital transactions. Banks should implement solutions such as: + Biometric authentication + Blockchain-based identity management + Strong authentication to prevent unauthorized access A secure digital identity process also helps banks comply with KYC requirements while ensuring customer convenience and data protection. Customers expect up-to-date, accurate data—from account balances to transaction records. Banks should ensure this by: + Conducting regular audits + Establishing clear data verification processes + Maintaining transparent reporting systems Artificial Intelligence (AI) and Machine Learning (ML) can further enhance reliability by detecting anomalies, automating data handling, and ensuring data consistency. As AI becomes more integrated into banking—from loan suggestions to credit scoring—banks must ensure: + AI systems provide fair, unbiased recommendations, without discrimination based on gender, age, geography, or income (e.g., not denying loans solely based on rural residence). + Use of Explainable AI, allowing customers to understand decisions made. + Clear feedback and appeal channels if customers disagree with AI-driven decisions. To establish Digital Trust, organizations must adopt technology platforms recognized for compliance with national and international standards, ensuring secure, transparent, and verifiable digital transactions. For example, PKI enables secure encryption, digital signing, and identity verification. Leveraging services from trusted providers and adhering to standards like eIDAS, FIPS, GDPR, and ISO/IEC 27001 demonstrates a serious commitment to protecting customer data and privacy. Digital Trust is now a strategic priority in the digital transformation of financial institutions. Building it through robust security, transparency, privacy, data integrity, and ethical technology use is essential for banks to maintain a leading position. Establishing Digital Trust with SAVYINT SAVYINT is a global technology company pioneering open banking, data security, and protection across critical sectors like Finance-Banking, Government, Manufacturing, Telecommunications, Healthcare, Education, and Media. Beyond being a trusted service provider, SAVYINT offers electronic authentication services, including timestamping and Qualified Trust Services (QTSP) for digital signing and electronic seals through its QTSP Remote Signing solution. With extensive experience in designing, deploying, and operating electronic identity systems (eKYC), digital signing, data encryption, and PKI and CA systems (national, internal and public CAs) for numerous banks and financial institutions, SAVYINT provides a comprehensive suite of solutions to establish Digital Trust: Connect with SAVYINT experts HERE to establish Digital Trust for your organization!
Enhancing User Experience (UX) in Open Banking
According to a report by Toptal, 90% of users abandon an application if they face difficulties while using it. Therefore, user experience (UX) is always a top priority for service providers—especially in the Open Banking ecosystem, where UX plays a key role in attracting and retaining customers. What are User Experience (UX) and User Interface (UI)? User Experience (UX) refers to the overall experience a user has with a product, website, mobile application, or specific service. It encompasses not only the use of features but also other aspects such as the user’s knowledge, emotions, and the value derived from interacting with the product, website, application, or service. A good UX enables users to navigate, operate, and engage with a product or service effortlessly. Conversely, a poor UX results in difficulties, complex operations, and confusion for users. User Interface (UI) refers to the layout, images, videos, colors, fonts, text, and navigation buttons—elements that users can visually perceive and interact with when using a website or application. User Experience in the Open Banking In the Open Banking ecosystem, user experience typically encompasses the entire customer journey when interacting with an application—from registration, shopping, payments, renewals, to post-sale support. These applications are built on open APIs, enabling seamless integration of various services and features. As a result, users can perform transactions such as deposits, transfers, or payments without repeatedly entering card or account information. Additionally, third-party payment initiation service providers (PISPs) can execute transactions on behalf of customers, delivering a convenient, secure, and consistent experience across the system. How to Improve User Experience in Open Banking? There are several ways to enhance user experience in Open Banking. Below are some fundamental suggestions for organizations to implement: User experience (UX) is a critical factor in the success of Open Banking solutions. A great UX stems from simplicity, transparency, and logical navigation. Enhancing accessibility, using user-friendly language, and prioritizing customer support are excellent strategies for organizations to improve user experience. About Savyint Open Banking Platform Savyint is a global technology leader pioneering Open Banking, data security, and cybersecurity. With exceptional expertise in strategic consulting, technical architecture design, standards development, and integration workflows for Open Banking, combined with extensive experience in deploying electronic identification, digital signing, data encryption, and Public Key Infrastructure (PKI) systems, Savyint supports financial institutions, banks, government agencies, and enterprises in their secure and efficient digital transformation journey. In building a modern Open Banking ecosystem, Savyint has developed the Open Banking Platform—a comprehensive solution that fully meets legal, technical, and operational requirements, from standardized APIs and connection gateways to TPP management, consent, encryption, and user identification. The platform comprises core solutions: Connect with Savyint’s experts HERE to start your Open Banking strategy!
Top 3 drivers of Open Banking
Open Banking is reshaping the financial industry by creating a flexible, transparent, customer-centric financial ecosystem. Supported by technology, regulatory frameworks and rising customer expectations, participating in the Open Banking ecosystem has become a key strategy for innovation, personalization, and enhancing competitiveness. Meeting customer expectations for personalized experiences Today’s customers demand more than traditional financial services. They seek seamless, instant, and value-added experiences in every transaction—from opening accounts and securing loans to managing personal assets. Open Banking enables financial institutions (FIs) and fintechs to leverage customer data—with consent—to deliver personalized solutions and streamline financial processes. For instance, HSBC allows intermediaries to share business account statements, reducing mortgage approval times. Banks and fintechs can develop innovative, personalized financial solutions in areas like payments, lending, or personal financial management (PFM). Statistics show that over 90% of North American consumers use apps for financial management, from bill payments to financial forecasting and cryptocurrency investments. This signals a growing demand for intelligent, data-driven, personalized financial products. Enhancing connectivity through Open APIs Open APIs are the backbone of Open Banking, enabling financial institutions to expand distribution channels and create multi-party ecosystems by: However, this requires modernizing infrastructure. While fintechs are often built with API-first and cloud-native architectures, many FIs are still undergoing digital transformation. Shifting from traditional value chains to multi-party ecosystems presents significant opportunities but demands strategic technology investments. Customer identity: the foundation for secure digital experiences In Open Banking, Know Your Customer (KYC) processes are not just regulatory requirements but central to customer experience and data security. FIs are modernizing identity systems to: Amid rising cybercrime, many banks have adopted Zero Trust Architecture (ZTA) and Multi-Factor Authentication (MFA) to replace traditional passwords—the weakest link. This reduces identity theft risks and better protects customers. Open Banking is no longer just a technological trend but a driver of financial inclusion. With growing customer expectations, the need for Open API connectivity, and secure identity systems, Open Banking is ushering in a new era for FIs, fintechs, and customers, redefining how the financial industry operates. Comprehensive Open Banking solutions from SAVYINT As Open Banking becomes an inevitable trend, with improving regulatory frameworks globally, SAVYINT introduces a comprehensive suite of Open Banking solutions that meet legal and technological requirements, enabling businesses and organizations to fully harness the potential of Open Banking: With deep expertise in deploying electronic identity systems, digital signatures, data encryption, and public key infrastructure (PKI), SAVYINT has partnered with numerous banks and FIs to provide strategic consulting, technical architecture design, standards development, and integration workflows for Open Banking. As a pioneer in developing architecture models, technologies, and process workflows, SAVYINT confidently delivers comprehensive solutions to realize Open Banking strategies—from API integration, consent management, and secure digital identity to establishing ecosystems with third-party providers (TPPs), ensuring compliance with domestic and international regulations. Contact SAVYINT’s experts today to unlock new opportunities with Open Banking.
Open Banking 2025: From data to personalized financial experiences with AI
The year 2025 marks a transformational shift in the Finance – Banking industry as Open Banking combines with Artificial Intelligence (AI) to deliver highly personalized financial experiences – faster, smarter, and better aligned with each individual’s needs. In the Open Banking ecosystem, where financial data is securely and transparently shared via APIs, AI acts as the “brain” that rapidly processes this data to generate personalized recommendations, predictions, and automated financial actions. Here’s how AI is reshaping Open Banking: Today’s customers increasingly demand tailored financial solutions. By learning from behavioral and transactional data, AI enables banks and third parties to offer highly relevant financial recommendations based on each user’s profile, spending patterns, and goals. These include smart budgeting suggestions, loan proposals matched to repayment capacity, or real-time cash flow analysis for improved financial control. Security remains a top priority in digital finance. By analyzing behavioral trends and standard transaction patterns, AI systems can detect anomalies and proactively flag suspicious activities in real time – often before damage occurs. AI also supports the deployment of Zero Trust security models, where every access request is treated as untrusted until verified. With continuous monitoring and threat detection capabilities, AI becomes a trusted guardian of users’ financial data. The finance industry generates massive volumes of data every day – from transactions and credit scores to behavioral signals. AI is the only technology capable of processing and analyzing these large datasets in real time while turning them into actionable insights. For organizations, this means smarter decision-making. For users, it represents a leap from simply viewing account balances to receiving real-time, personalized financial advice. AI-powered chatbots using Natural Language Processing (NLP) are becoming increasingly common in financial institutions. These systems operate 24/7, significantly reduce service costs, and provide instant responses to investment inquiries, debt management questions, account lookups, and more – all contributing to higher customer satisfaction and loyalty. Open Banking extends far beyond traditional bank accounts. Thanks to API and AI integration, financial services can now be embedded across diverse digital platforms – from ride-hailing apps and e-commerce to social media. This means customers can make payments, purchase insurance, or access financing directly within non-banking apps – enabling a seamless and contextual financial experience. AI is accelerating the growth of Banking-as-a-Service (BaaS). Businesses can integrate AI and financial APIs to provide banking-like services without holding a traditional banking license. This fast, flexible, and cost-efficient model is redefining how financial services are delivered and is reshaping the global competitive landscape. Instead of fixed monthly payments, users can now authorize systems to adjust payment amounts and timing based on their account status, income fluctuations, or financial priorities. AI plays a central role in enabling this flexibility by setting intelligent financial triggers – ensuring that all transactions remain automated, secure, and within user-approved parameters. AI is truly transforming data into experience – enabling hyper-personalized financial services for every user. In the race toward inclusive and intelligent finance, the leading edge belongs to those organizations that master data and seize emerging trends with agility and vision.
Elevating security standards for online banking services in Vietnam
On October 31, 2024, the State Bank of Vietnam issued Circular No. 50/2024/TT-NHNN, establishing regulations on security and confidentiality for online banking services -marking a strategic step in building a robust legal foundation for Vietnam’s digital banking ecosystem. As digital banking services rapidly expand and cyberattacks and data breaches become increasingly common, the banking sector must continuously enhance safety, security, and transparency in all electronic transactions. Circular 50 replaces Circular 35/2016/TT-NHNN and meets the growing demand for higher security amid Vietnam’s strong digital transformation efforts. Effective from January 1, 2025, Circular 50/2024/TT-NHNN applies to credit institutions, foreign bank branches, intermediary payment service providers, and credit information companies. All online banking services must comply with stringent security standards to ensure safety for both banks and their customers. The Circular clearly outlines principles and technical requirements in the design, implementation, and operation of online service systems. Key highlights include: The tightened security standards under Circular 50/2024/TT-NHNN are not merely a legal compliance obligation, but a strategic advantage for banks in the digital age – building greater trust in online services. For credit institutions, the Circular provides strong motivation to invest in IT infrastructure, standardize operational processes, and gradually align with international standards such as PCI-DSS and ISO/IEC 27001- laying the groundwork for deeper integration into the global Open Banking movement. For customers, the Circular enhances trust in digital services and reduces risks associated with online transactions. At present, with the enforcement of Circulars 64 and 50, credit institutions are required to upgrade their systems to ensure stronger security at every level of service. In the long run, compliance with Circular 50 – along with adherence to international standards like PCI-DSS and ISO/IEC 27001, and alignment with strong customer authentication (SCA) requirements under PSD2/PSD3 in the EU—will help elevate Vietnam’s banking sector to global standards, promoting innovation and fostering fair competition.
Savyint & Kryptus: Collaboration to build open banking security standards
Open Banking is experiencing remarkable development in many countries. To ensure that open banking operates effectively and securely, it is particularly important to establish and adhere to a system of technical standards. With their expertise, Savyint and partner Kryptus have collaborated to develop a specific security standard system for each component in open banking. The API Gateway plays a crucial role in securing APIs by providing authentication, authorization, access control, and traffic limiting mechanisms. For the API Gateway, we ensure compliance with European and global regulations such as PSD2/PSD3, FAPI 2.0, CIBA, OIDC/OAuth2, and API Security. Meanwhile, Consent Management utilizes the Strong Customer Authentication (SCA) method as stipulated in PSD2, as well as security standards for key storage on HSM devices that meet FIPS 140-2 Level 3 or higher. The data exchange flows, data signing in transaction flows, or user data sharing are encrypted with the highest security level, ensuring integrity and safe authentication with JWS (JSON Web Signature) and JWT (JSON Web Token). End-to-end data encryption is also strictly adhered to with JWE (JSON Web Encryption) and RSA-PSS (Probabilistic Signature Scheme). In Vietnam, with the specific regulations for implementing open banking officially in effect, the standards set by Savyint and Kryptus fully comply with the regulations on Open API, API Security (according to Appendices 1 and 2 of Circular No. 64/2024/TT-NHNN), as well as regulations on transaction encryption, digital signing, and user authentication (according to Circular No. 50/2024/TT-NHNN). This is a promising market for the development of open banking in the near future. “We are proud to contribute our expertise in building a secure and regulation-aligned open banking ecosystem in collaboration with Savyint,” said Thierry Martin, Kryptus Managing Partner. “Kryptus has already achieved FIPS 140-2 Level 3 and the Common Criteria EAL4+ certification for HSM, strengthening our compliance across various global environments, as the fintech and banking sectors require enhanced key protection. Our joint solutions not only fully comply with European and international standards such as PSD2 and FAPI, but also with Vietnam’s specific regulatory frameworks, including Circulars 64/2024 and 50/2024. This partnership reflects our long-term commitment to helping financial institutions meet compliance obligations while accelerating digital transformation. We believe this collaboration will pave the way for broader regional adoption and global expansion of secure open banking models.” The swift, solid and well-directed steps taken by the two companies in providing a secure and safe open banking solution will be an advantage for Savyint and Kryptus to conquer markets in the region and globally. About Savyint SAVYINT is an IT security company in Sydney, Australia, with an R&D Center in Hanoi and international offices in Singapore, Dubai, Ho Chi Minh City (Vietnam), and Sofia (Bulgaria). With over 20 years of experience, we consistently rank among the leading global information technology enterprises, providing software platforms, system solutions, and services for digital transformation. Our expertise spans Open Banking solutions, information security, and FinTech, particularly in the Finance – Banking & FSI, Government, Manufacturing, Telecommunications, Healthcare, Education, and Media sectors. About Kryptus Kryptus is a Swiss and Brazilian multinational company specializing in cybersecurity and cryptography solutions. Since 2003 it has been delivering highly customizable, reliable and secure encryption and cybersecurity solutions. For over twenty years, we have served public and private sector clients in Latin America, Europe, the Middle East and Africa for critical applications, with the best level of products and services for mission-critical applications.
Open Banking takes flight in Vietnam
On December 31, 2024, the State Bank of Vietnam officially issued Circular No. 64/2024/TT-NHNN, setting the regulatory foundation for Open Banking through the implementation of Open Application Programming Interfaces (Open API) within the banking sector – a key driver of digital finance innovation globally. Open Banking is a new financial ecosystem in which banks and financial institutions allow third parties (fintech companies, financial service providers, etc.) to access customer data, with customer consent, to develop new services such as personal financial management, integrated payments, etc., through Open Application Programming Interfaces (Open APIs). Amid the rapid global development of Open Banking, in Vietnam, the State Bank of Vietnam issued Circular 64, effective from March 1, 2025, which is considered a legal tool paving the way for establishing a controlled, secure, and transparent data-sharing infrastructure, fostering innovation in the financial and banking sector. Key highlights in Circular 64: Accordingly, the Bank must comply with API security technical standards as stipulated in Annex 01 and Annex 02 issued with Circular 64/2024: These regulations have a profound impact on the development of Open Banking in Vietnam. Most crucially, they establish a clear and consistent legal framework for the secure and controlled connection, sharing, and processing of customer data, thereby laying the foundation for building innovative, personalized financial products and services. This enables the realization of comprehensive digital banking goals by allowing third parties to access user data with user consent. This is the key factor in forming an expansive, flexible, and customer-centric open banking ecosystem. Simultaneously, these regulations create significant opportunities for the Fintech community to engage more deeply in the financial ecosystem, enhancing the provision of new and innovative services. In the initial phase, financial institutions may face challenges in adapting. However, the issuance of Circular 64 fundamentally provides a robust legal foundation, serving as a springboard for building a modern Open Banking ecosystem in Vietnam, where data is leveraged and managed rigorously, with users at the center of all financial services.
Open API: Ushering in the era of Open Banking
Open API plays a pivotal role in the digital transformation of the financial and banking sectors. It drives innovation in traditional banking, promising secure, efficient financial transactions that meet every customer need. 1. Open Banking and Open API market could exceed $200 billion by 2033 Open banking represents the evolution of a new financial ecosystem based on connections between banks, financial institutions and third-party service providers, supported by APIs. Through this ecosystem, banks can offer customers superior and more flexible services, while enabling better personal financial management and decision-making. Although still relatively new, banks and financial institutions are actively engaging in the open banking ecosystem. According to reports and forecasts from Market.us, the global open banking market is expected to grow steadily over the years, reaching $203.8 billion by 2033. On January 13, 2018, the European Union’s Payment Services Directive (PSD2) came into effect, requiring banks to grant third parties access to customer accounts via available APIs, provided customers give consent. By using APIs, third parties can access banking data, enabling trusted banks and service providers to serve customers more effectively. Since the advent of PSD2, the payments sector has undergone a true technological revolution, notably with the rise of open banking and open APIs. These developments have fueled banks’ efforts to innovate and transition from traditional to new business models. Open banking and open APIs offer banks opportunities to create new services, personalize offerings, and enhance customer experiences. Read more: Open API – The key to promoting open banking 2. Benefits of applying Open API in Open Banking 3. Challenges of applying Open API in Open Banking Despite the benefits, applying Open API in open banking comes with challenges. Overcoming these is crucial to ensure the sustainability and security of open banking initiatives based on Open API. While Open API offers immense potential for the open banking ecosystem, participants must address technical, security, governance, and collaboration challenges to fully unlock its benefits. 4. Open API application in Savyint Open Banking: Comprehensive Open Banking Solution 4.1. Savyint partners with global leaders in providing Open API and Open Banking solutions On the journey to conquer the era of open banking, Savyint has been collaborating with international giants in Open API and Open Banking to deliver advanced, secure solutions tailored to the specific requirements of each market. Notable partners include Brankas, SaltGroup, Konsentus, Curity, Axway, TykIO, and others. Brankas is currently one of the world’s leading Open Banking solution providers, particularly in the Asia-Pacific and Middle East regions. With an extensive network of connections to banks and financial institutions across Southeast Asia, Brankas focuses on payment solutions and API-based connectivity for financial products. Savyint and Brankas work closely to provide solutions related to Open API, user authentication and consent management in compliance with international standards, and to develop a Banking-as-a-Service (BaaS) platform that helps build and expand the Open Banking ecosystem in the region. Salt Group is recognized as a trusted security solutions provider for banks, financial institutions, and government agencies in Australia and the Asia-Pacific (APAC) region. Savyint partners with SaltGroup to enhance the security and trustworthiness of its Open Banking ecosystem. Leveraging SaltGroup’s strengths in strong authentication, fraud prevention, and digital identity management, the collaboration focuses on strengthening the security of open financial transactions, ensuring regulatory compliance, and protecting customer data in the digital banking environment. Savyint has joined forces with Konsentus — a global brand in open banking consultancy and infrastructure — to co-develop operational principles, service models, and regulatory frameworks for open banking in Vietnam. Through working sessions, both parties will jointly build a set of principles to guide the operation of Vietnam’s open banking ecosystem, establish operational processes for technology deployment, and develop technical specification documents. Curity is a leading provider of API-driven identity management solutions, delivering comprehensive security for digital services. Curity’s strength lies in its advanced CIAM solutions with multi-factor authentication (passkeys, digital wallets), SSO, adaptive authentication, and FAPI 2.0 protection, helping to enhance user experience and ensure data security in open financial transactions. By integrating Curity’s pioneering technologies, Savyint is gradually modernizing the banking sector, strengthening security, and improving the user experience. Axway and TykIO are long-established global technology companies specializing in API integration and management solutions. Partnering with Axway and TykIO provides Savyint with the opportunity to build a comprehensive API management and integration system within the open banking ecosystem, rapidly deploy infrastructure, and ensure security, safety, and strict compliance with both domestic and international standards and regulations. With innovative solutions and strategic partnerships, Savyint is committed to offering the most advanced technologies and optimal user experiences. 4.2. About Savyint Open Banking Solution The Savyint Open Banking Platform is a specialized solution designed by Savyint for the financial and banking sector, meeting legal and technological requirements to connect and build a digital financial ecosystem. The solution focuses on enhancing and optimizing APIs through SAVYINT Open Banking API — ensuring seamless connection with all systems and providing standardized, ready-to-use APIs — and SAVYINT API Management — supporting the development, analysis, operation, and expansion of APIs. At the same time, SAVYINT Open Banking also emphasizes portals, consent management, user identity, and data security through the synergy of solutions such as: With solid technological infrastructure and operational expertise, Savyint delivers advanced technology and the best user experience to customers. Connect with Savyint experts now to gain a leading edge in open banking.
Europe pushes Open Banking: Mandatory UX improvements on banking apps
How you see and interact with your online bank accounts is about to change. That’s because Europe is forcing change into the financial market. Digital transformation is a thing this decade. “Digital disruption,” startups who want to be “the Uber of X” in their industry, and going “mobile first” are not new trends. But the banking industry has been slow to move with the times. New businesses have started to push into the European banking market. Yet progress has been slow, due to both regulation and customer inertia. Even though companies who focus on the best customer experience outperform the market. The pace of change in the banking industry will accelerate in 2018. Some new laws coming into effect are to thank. Why are things changing? European governments have decided that “traditional” banks are uncompetitive and slow. New banks find it very hard to break into the market. To do something about this, they have created some new legislation. This new legislation will force all banks to share a lot more digital information when their customers ask them to. As the above diagram shows, current core banking services will have a new digital interface added. This is called an API, or Application Programming Interface. It will allow third party “fintech” (Financial Technology) apps and services to get information directly from your bank. It’ll also add a new layer of tools on top. These fintech apps may be provided by your bank, or by external companies. All these changes must become law by January, 2018. In addition to the European legislation (PSD2), the UK has its own version (Open Banking). So this change will affect the UK regardless of Brexit. What differences will it make? This piece will focus on three of the biggest, broadest changes and how they will affect consumers. I will also follow up with a deeper dive into each change. There, I’ll discuss possible side effects as well as business opportunities. Direct bank account payments What are they? Right now, if you’re shopping online, you would most likely choose to pay with your debit card. The merchant (e.g. Amazon) has an acquirer (e.g. WorldPay) who coordinates with your debit card provider (e.g. Visa). They will then pull the payment out of your bank account (e.g. Barclays). That’s a lot of companies — and they’re all getting paid. The idea is that you, the consumer, can instead “push” a bank transfer direct from your bank (Barclays) to the merchant (Amazon). How it affects you, the consumer In the future, instead of entering all your card information, you’d grant Amazon permission to access your bank account. The user experience would be like logging into other websites with your Facebook account today. The first time, it will take you to your bank’s website and ask you to confirm your authorization. After that, the permission should stay active until you revoke it, so you can just click and buy. It will be interesting to see how this change affects all those other companies who were playing the middlemen. That will, of course, have an indirect effect on you. But it’s hard to say exactly what. Amazon’s costs should go down. Will they pass those savings on to you, or otherwise incentivize you to pay in the way that’s cheapest for them? Information sharing across all financial institutions What is it? Currently, the only way to get your bank information online is to log on to the website. Or perhaps they have a clumsily ported mobile website, packaged as an “app.” If you wanted to let another organization see your bank account, you’d have to give them your login details. This breaks the bank’s T&Cs, and would cause all kinds of issues in case of fraud or misuse. How it affects you By the new regulations, banks must provide a secure way for third parties to access your banking information. You will be able to consolidate all your information in one place, and see your ‘actual’ balance across all banks, accounts, and cards. Furthermore, you’ll be able to use that information in useful services. For example, some of the new “challenger banks” like Monzo or Starling can show you a breakdown of your spending. They can do it by category (e.g. restaurants), then by store (e.g. Nandos), then by transaction. They’ll even show you the location of that pub where you bought a round last night. Now imagine if you didn’t have to switch current accounts or wait for your bank to bring out something similar. You could just plug in to a service that collates it for you, from all your accounts and credit cards. After these changes, that should be possible and even simple. There are many possible applications for this type of information. Some examples include: personalized credit or budgeting advice; easier savings; easier current account switching (based on automated, personalized advice); better terms for loans or credit (in exchange for more access to your information for underwriting); easier personal tax returns, or small business accounting; third party fraud detection services you can use across all your cards and accounts; simpler and cheaper international transfers; and the list goes on. Let’s look at an example of the possible, unexpected side effects of the improved customer service and transparency banks can provide. There’s a great story here about how Monzo helped one customer get his stolen bag back the same night it was taken. There was even a bonus bottle of Jack Daniel’s included. Strong authentication for online payments What is it? Authentication is how the bank or payment provider knows that you are who you say you are. Given how much of your financial information they’ll be able to share, it’s critical that they use it securely. This is where authentication comes in. The new regulations will require multi-factor authentication in many areas. This will include every online purchase over €30. There are three commonly recognized methods of authentication: Using more than one of these methods together is “2-factor” or “multi-factor” authentication. How it affects you The average online