Kicking off an open banking project is a daunting task for a financial institution. The line of business needs to determine which open banking use case will be profitable, while the IT side of the bank needs to stand up open banking infrastructure while juggling multiple projects with limited resources. And then there’s the age-old question: should I purchase a software solution or build a custom solution in-house?
Both paths can lead to the same result, but the level of success can vary. The rise of open banking is bringing this discussion front and center as financial institutions grapple with new initiatives. The goal: increase revenue streams and improve customer experiences. So what’s the best path for getting there?
Goals to consider
The ultimate goal of your open banking project may include:
- Offering value added services with customer bank data
- Potentially finding new customers through fintechs
- Easily participating in an aggregator’s ecosystem.
As for the technical details and building up of an open banking infrastructure, many factors go into making a decision. One is the labor cost of in-house open banking technology development.
It’s estimated that human capital is the number one operating expense for most companies, at 40%-60%. Tying up valuable resources such as employees’ time is not taken lightly. Enterprises embarking on key digital transformation projects need to assess the pros and cons of such a journey.
Benefits of building your own open banking technology
One advantage of designing a custom open banking solution is avoiding vendor lock-in. The bank has complete control of the development, testing, and adoption of the solution. But keep in mind that with this control comes the responsibility of maintaining the solution – do you have the teams and the right skills to manage such a solution? There’s also the challenge of remaining compliant with ever-changing open banking and security standards.
Prepackaged solutions can seem like a one-size-fits all, hence the appeal of a custom-tailored open banking infrastructure. The solution may only fit or adapt to certain business needs. And from a competitive standpoint, it may not provide the differentiation and competitive advantage you are seeking for your offering.
If technology is what differentiates your product, build it.
Reasons to buy a pre-built solution
On the other hand, there are definitely some good reasons to buy an existing – and proven – solution on which to build your open banking infrastructure.
- Do you want to shorten time to market and earn revenue on your APIs faster?
- Would you prefer to avoid navigating changing open banking regulations and standards on your own?
- Would you consider APIs a core capability of your bank or credit union? Do you have the teams and skills on-hand to stand up an open banking infrastructure on your own?
There are many facets to open banking technology and possible use cases: open banking platforms, Open Banking APIs, Banking as a Service (BaaS)… the right partner can help you see the possibilities, stand-up solutions quickly, and reap the benefits sooner.
If you’re not sure you see maintaining APIs as a core capability, would rather leave the risk up to experts, and want to get your APIs to market faster, purchasing an open banking solution might be the better option for you.
What to look for when selecting an open banking platform
The right open banking solution should allow you to:
- Find new customers by creating a financial services ecosystem of third parties
- Speed time to revenue and ROI by providing pre-built APIs to open banking standards
- Reduce security risks with integrated API security
- Eliminate project delivery risk and the need for long, trial-and-error research projects thanks to pre-integrated consent management
- Stay in front of the competition by reaching new customers through an expanding ecosystem of TPPs and fintechs.
At Axway, we’ve built on our long-standing API Management expertise by creating Axway Open Banking: an API-fueled financial ecosystem where banks share financial information in a simple, secure, and transparent way.
Axway Open Banking enables broad integration across the entire financial ecosystem, ultimately leading to new and innovative banking products which are faster, cheaper, and more adaptable to our rapidly changing world.
Achieve wins faster with Axway
When faced with the challenges of systems integration, security, consent management, and regulatory compliance, Brazilian bank Tribanco sought a complete and reliable solution.
“We decided to look for an accelerator in the market, so that we didn’t have to implement all of this infrastructure on our own. After evaluating several partners, we identified Axway as the most robust and mature platform,” explains a Tribanco Solutions Architect.
The bank, a member of the Martins Group, specializes in offering credit solutions to small and medium retail customers, and sees a unique potential to increase customer acquisition through its digital channels, among other diverse opportunities being explored.
“The sky is the limit for creating new products and services. Open banking is really facilitating the customer experience with financial institutions. And the institution needs to act as a client partner,” concludes another Tribanco spokesperson.
If you’re not sure you want to build your own open banking infrastructure from scratch, let us help you securely participate in a growing open finance ecosystem, so you can start reaping benefits quickly. No trial-and-error required.
Take a look at how Axway Open Banking helps you take banking to the next level.