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The role of IAM in OpenBanking and where do we stand

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This slide deck was used comprehensively discuss 'OpenBanking' based on PSD2 standard and touch on GDPR. Discuss the technologies to be used to cater for PSD2 requirements. Finally it looks at the Sri Lankan financial industry and how PSD2 concepts can be applied there.

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The role of IAM in OpenBanking and where do we stand

  1. 1. The Role of IAM in Open Banking & Where Do We Stand? Colombo IAM User Group - 2nd Meetup Pushpalanka Jayawardhana Financial Solutions Team - WSO2
  2. 2. “Banking is necessary; banks are not” - (Bill Gates, 1990)
  3. 3. International Financial Industry Concerns ➢Contribute to a more integrated and efficient European payments market ➢Improve the level playing field for PSPs (including new players) ➢Make payments safer and more secure ➢Online shopping without a credit card ➢Better protection against fraud ➢Help lower charges for consumers on card payments
  4. 4. Ref : https://www.pcisecuritystandards.org/pdfs/webinar_100519pci_pts_3.0.pdf Payment Card Industry Security Standards For protection of cardholder payment data,
  5. 5. Payment Services Directive 2 EU Directive that applies to all Banks operating in the EU that regulates payment services throughout the EU, with a compliance deadline of January 2018
  6. 6. Open Banking 1 : Possible central view Banks expose their customer payment and account data, with customer consent, to Third party Payment Providers (TPPs) via APIs. TPP PISP/AISP Bank A Bank B Bank C Merchant Now PSD2 Bank A Bank B Bank C Merchant
  7. 7. Open Banking 2 : No Involvement of Card Network 7 ➢ Less hops ➢ Lower fees for transactions ➢ Easy to track the path
  8. 8. Aggregated View of Accounts (AISP Flow)
  9. 9. Payment Flow (PISP) Credits to Dinosoft Labs from Noun Project Checkout Item Login Page 2 Factor Authentication Customer Consent Initiation payment info 1 2 3 4 PISP 302 5 Token 6 Payment Complete 7 Settlement
  10. 10. PSD2 Compliance Requirements ➢ API Specification ○ API Definitions ○ Secured API invocation ○ API Usage Monitoring ➢ Strong Customer Authentication ○ 2 Factor Authentication (SMSOTP, FIDO, Duo, MePin) ○ Adaptive Authentication ○ Consent Management ➢ Incident Reporting ○ Security Incident Reporting [Transactions affected,server downtime, Economic
  11. 11. Strong Customer Authentication Ref : https://cdn-images-1.medium.com/max/1200/1*cqJ3MUF-vOG9IVTLOOQQTQ.gif
  12. 12. Ref : Accenture Payment Services & Accenture Technology Advisory, PSD2 & Open Banking Security and Fraud Impacts on Banks Strong Customer Authentication Ctd..
  13. 13. Adaptive Authentication ➢ Authentication flow is defined by risk level ➢ PSD2 define several exemptions for SCA applications ○ Not to kill user experience for small transactions and bulk transactions ➢ Security level can be decided based on, ○ The amount of transaction ○ Time elapsed from previous SCA ○ Transaction patterns on user ○ Role of user - Cooperate or private
  14. 14. Consent Management ➢ Defined by PSD2 RTS on SCA and secure communication and GDPR ➢ Safeguard right of the user on personal data to, ○ be informed - Inform user of personal data collection ○ access - Validate information processing at any time ○ rectification - When user feels data is incomplete or accurate ○ restrict data processing - Just store, don’t process ○ data portability - Transfer data to another party ○ forgotten - Request removal of personal data ○ be notified on a data breach - Report to user within 72 hours
  15. 15. No Screen Scraping
  16. 16. Technology Requirements “Draft Regulatory Technical Standards, explicitly mentions to be based on known standards” ● User authentication (with SSO) ○ SAML 2.0 ○ OpenID Connect ● Access delegation - OAuth 2.0 ● Fine grained authorization - XACML ● Multifactor authentication - SMSOTP, FIDO, DUO, MePin 16
  17. 17. Ref : https://www.abe-eba.eu/downloads/knowledge-and-research/EBA_May2016_eAPWG_Understanding_the_business_relevance_of_Open_APIs_and_Open_Banking_for_banks.pdf Other Standards ISO 27001 - for information security management systems ISO20022 - remove ambiguity in messages relevant to payments, securities, FX, Trade services & Cards
  18. 18. Inside Story - Open Banking
  19. 19. DEMO With https://openbanking.wso2.com/
  20. 20. Open Banking: The opportunities Bank A Bank B Bank C Merchant Bank A Consolidated customer account and payment info across multiple Banks TPPTPP
  21. 21. App Development
  22. 22. Ref : Deutsche Bank Global Transaction Banking - Payment Services Directive 2 1. One-leg Out – in EEA currency: EEA currency sent from the EEA to a non-EEA country e.g. EUR payment from France to Sri Lanka 1. One-leg Out – in non-EEA currency: Non-EEA currency sent from the EEA to a non-EEA country e.g. LKR payment from UK to Sri Lanka 1. One-leg in – in EEA currency: EEA currency payment sent from a non-EEA country to an EEA country e.g. EUR payment from Sri Lanka to France 1. One-leg in – in non-EEA currency: Non-EEA currency sent from a non-EEA country to an EEA country e.g. LKR payment from Sri Lanka to UK PSD2 Impact on Us
  23. 23. Banking Industry in Sri Lanka ➢ Sri Lanka Interbank Payment System (SLIPS) ○ Same day electronic fund transfer ○ Established in 2010, being first in South Asia ➢ LankaPay Common Electronic Fund Transfer Switch (CEFTS) ○ For real-time payments ○ Initiated in 2015 ➢ JustPay - From LankaClear (pvt) Ltd ○ Applies 2FA ○ For real time retail payments under Rs. 10 000/= ○ Central Bank of Sri Lanka (CBSL) approved security standards ➢ Have already thought on AISP like applications ➢ Have the foundation of collaboration among banks in real time JustPay© - http://www.lankaclear.com/product_service/42-overview
  24. 24. Ref : Accenture Payment Services & Accenture Technology Advisory, PSD2 & Open Banking Security and Fraud Impacts on Banks
  25. 25. Monetization of applications will be made easy...
  26. 26. Q & A Twitter : @Pushpalanka LinkedIn : https://www.linkedin.com/in/pushpalanka/ WSO2 Open Banking : https://openbanking.wso2.com/
  27. 27. Thank You!

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