IBS Journal February 2018
37
on the ISO20022 business vocabulary and additions are a based on the FIBO principles.
Tesselaar says: “While this may seem like a scary concept for banks that will see even more contenders to compete with for customers, this ‘sharing nature’ of open APIs that will be created by PSD2 doesn’t need to be all bad. It could actually greatly benefit the banking industry in terms of new opportunities and the potential for growth.
CLOUD ENABLING THE BANKING INDUSTRY
Simple cloud central utility service, brokered to multiple bank subscribers
“With PSD2, banks could easily outsource technology services to, and insource services from, the younger, more innovative startups meaning that they wouldn’t necessarily have to own all of the technology or infrastructure required to provide a certain service. A good example of this in practice already is with banks using Transferwise for international payments – they can offer the service, but don’t need to invest in building and maintaining an infrastructure themselves. This subsequently means that banks will have more flexibility, but also stand the chance of attracting new audiences, such as millennials, with their enhanced level of customer service.”
Tesselaar continues: “Whether it is PSD2 across Europe, the Open Bank Project in the UK or the Unified Payments Interface in India, it is the regulators who are pushing the Open Banking agenda. With banks instructed to allow third parties to access some of their data, the scramble for Application Programming Interfaces (APIs) – one of the key ways to provide that access – is on.”
The problem, however, is that every bank is defining its own set of APIs, thereby hampering connectivity, easy integration and openness, which sort of defeats the purpose.
“BIAN has been trying to address this issue with a series of measures,” says Tesselaar. “At its heart is a service landscape that serves as a reference model of a bank and comprises all possible business functions. One of the important features of this model is its taxonomy, which lays out clear, standard definitions for these banking business functions, so that they mean exactly the same thing to every person and every bank. The question banks are asking is how can we replace our existing legacy technology with a more modularised approach.”
Tesselaar says: “A good example is the American bank, PNC, which wanted to replace its payments engine which was completely embedded in its legacy environment. It started with the BIAN model and began mapping the systems it had against the systems it had to build. It carved out part of their legacy system and replaced it with a modern new one. It’s a step-by-step process with the banks.”
Adopting the Cloud
BIAN is also very keen that the cloud is properly adopted by the banking community. The primary use of the Cloud to date has been to provide virtual/remote access to some hosted capability, technical or functional in nature. These hosted services often exploit the scalability and flexibility of the distributed Cloud infrastructure to reduce start-up costs, provide access to leading practice technologies and/or reduce operational costs and complexity. In this conceptually centralised model each service subscriber integrates their own dedicated instances of the Cloud hosted utility services into their local business applications or working environment.
The fact that aspects of production are remotely supported may in cases be completely transparent to their business users. The approach described here that seeks to ‘Cloud-enable’ the banking industry involves an extension to this centralised view of virtual service delivery. In an extended model, different banking industry participants and possibly non-bank enterprises that need access to financial service capabilities offer and consume business services from each other and specialist business service providers ‘through’ the Cloud. To represent this type of service exchange, an additional higher level ‘conceptual model’ is needed to package and organise the Cloud services in a standard form suitable for sharing between participants. This conceptual overlay is defined using the BIAN Service Landscape and its constituent Service Domains. The Service Domains define service-enabled business capability partitions providing the organising structure for the SaaS solutions.
Tesselaar says: “Being part of BIAN, technology companies, such as Infosys, have a key role to play in accelerating the shift to Open Banking. They are the trusted parties for their clients so it’s their role to help the banks in finding their way in this new era by showing and providing them the best practices based on an industry standard such as BIAN. This will enable all to move, in a controlled and proven way, into the desired future direction. As banks move to the new paradigm, they would also need to decide
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