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WSO2 Open Banking
Moving Banks beyond the Norm
Paul Rohan
Seshika Fernando
Senaka Fernando
Presenters
Paul Rohan
Author of PSD2 in Plain English and Open Banking Strategy
Formation
Seshika Fernando
Head - Financia...
Market Potential
THE CURRENT NORM MOVING BEYOND THE NORM
Product Architecture Platform Architecture
Lock-in potential Trad...
Where are these “microsegments”?
The Long Tail
• The theory is that the economy is increasingly
shifting away from a focus...
• Product Businesses focus on the needs of
the mass market in conceiving new
products and services, which they can
deliver...
Strategic Perspective
THE CURRENT NORM MOVING BEYOND THE NORM
Product Architecture Platform Architecture
Understanding of ...
Moving beyond the
norm to “Four Parties”
PSD2
4th
Complementary App or
Service with Client
Consent to instruct
PSD2 3rd
Pa...
Structural Differences
THE CURRENT NORM MOVING BEYOND THE NORM
Product Architecture Platform Architecture
Use of Business ...
Management Style
THE CURRENT NORM MOVING BEYOND THE NORM
Product Architecture Platform Architecture
Growth bottleneck
Add ...
Mirroring Architecture and
Governance
• The way in which a platform is governed
and the way in which it is architected
mus...
New Data, New Insights, New Journeys,
New Governance
The Norm
1) Data on the customer’s direct
engagement with the bank
2)...
PSD2: Recipe for Digital Transformation
● Data moving out of closed legacy systems through Open APIs
● Consolidation of fi...
Open Banking: The opportunities
Bank A
Bank B
Bank C
Merchant Bank A
Consolidated
customer account and
payment info across...
Step 1
Comply
Expose data securely
Step 2
Reclaim Loyalty
Become TPP
Step 3
Digitally Transform
Offer services beyond bank...
15
Build internal and
external developer
ecosystems with an
API marketplace.
Manage identity,
security, and
privacy across...
WSO2 Open Banking
● API Manager
● API Security + SCA
● API Analytics
● API Monetization
PSD2 Compliance
● API Integration
...
https://openbanking.wso2.com/
Different views on Open Banking & PSD2
1. PSD2 compliance is a necessity (yet another requirement to meet)
2. Open Banking...
Adoption Challenges | Pain Points
● Deadlines to be met, and limited time to spend on R&D
● New capabilities, unknown supp...
The Need and the Opportunity
● Meeting compliance requirements of the regulators
● As a part of being competitive in the m...
The value of using WSO2
● Proven track record of working with financial institutions of all sizes
● Standards-based API-M/...
Resources
● More Information - http://wso2.com/solutions/financial/open-banking/
● Try out WSO2 Open Banking - https://ope...
THANK YOU
wso2.com
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Open Banking - Moving Banks Beyond the Norm

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Open Banking comes with the promise of taking banking from a commodity to an ecosystem. It also comes with a fair share of challenges. To support the business architecture of Open Banking, banks have to “scale beyond the norm”. This means new business models, new governance and new partners.

As opportunities arise, your architecture needs to scale efficiently and quickly but your technology needs to scale even faster. Stopping at PSD2 compliance through API management is not good enough. Banks need technology partnerships that extend towards integration, security and analytics to realize the full potential of Open Banking. The WSO2 platform is designed around these core technology principles. It enables a bank to move from a closed model towards an ecosystem model, where the customer’s lifestyle is as important to a bank as their banking needs.

This webinar will cover:

The market potential of Open Banking
The shift in strategic perspective from closed to open banking
The new normal - Customer journey, business models and data driven success
Building a digital transformation partnership - Banking beyond the norm with WSO2 - https://wso2.com/solutions/financial/open-banking/

Published in: Technology
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Open Banking - Moving Banks Beyond the Norm

  1. 1. WSO2 Open Banking Moving Banks beyond the Norm Paul Rohan Seshika Fernando Senaka Fernando
  2. 2. Presenters Paul Rohan Author of PSD2 in Plain English and Open Banking Strategy Formation Seshika Fernando Head - Financial Solutions, WSO2 Senaka Fernando Director - Solutions Architecture, WSO2
  3. 3. Market Potential THE CURRENT NORM MOVING BEYOND THE NORM Product Architecture Platform Architecture Lock-in potential Traditionally High/reduced by PSD2 Very High Margins in competitive market Medium if Low Rivalry/down with PSD2 Potentially Very High Market Large Segments Microsegments Scale Economies Potential High Very High Customisation by end users Minimal Extensive Network effects potential Low Very High Revenue model Lump Sum Sales/Very Infrequent Revenue stream
  4. 4. Where are these “microsegments”? The Long Tail • The theory is that the economy is increasingly shifting away from a focus on a relatively small number of "hits" (mainstream products and markets) at the head of the demand curve and toward a huge number of niches in the tail. • As the costs of production and distribution fall, especially online, there is now less need to lump products and consumers into one-size-fits-all containers. • In an era without the constraints of physical shelf space and other bottlenecks of distribution, narrowly-targeted goods and services can be as economically attractive as mainstream fare.
  5. 5. • Product Businesses focus on the needs of the mass market in conceiving new products and services, which they can deliver with economies of scale and sell in large volumes. • A Platform Business aims to capture niche markets “in the long tail” without having to attempt to create products and services for them. • Instead, App Developers might find the niche markets lucrative enough to pursue using the platform as a foundation. The platform owner can therefore penetrate many market niches without bearing the direct costs or risks of dabbling in them Ecosystems expand markets: Capturing the “long tail”
  6. 6. Strategic Perspective THE CURRENT NORM MOVING BEYOND THE NORM Product Architecture Platform Architecture Understanding of a Good Product A good product design has prospects A good product outside an ecosystem is irrelevant Achievement of Coordination Conventional command-and-control Gatekeeping/Process Control/Metrics/Relationships Connection of Product Architecture to Organisation Products mirror organisation Architecture/Governance must interlock Competitive focus Better than peer bank Evolve faster and better than rival platforms
  7. 7. Moving beyond the norm to “Four Parties” PSD2 4th Complementary App or Service with Client Consent to instruct PSD2 3rd Party acting as a Platform Governed by GDPR not PSD2 3rd Regulated Third Party Provider with Customer Consent AISP and/or PISP 2nd Consenting Payment Account User User 1st Bank with legally mandatory APIs AS PSP 2nd 1st CLOSED 2nd 1st OPEN PSD2 3rd 4th
  8. 8. Structural Differences THE CURRENT NORM MOVING BEYOND THE NORM Product Architecture Platform Architecture Use of Business Partners Very rare/small network Potentially Hundreds/Thousands Dominant costs High Fixed costs High Fixed Platform/Low Apps/Lower Variable Both Multi-sidedness Rare Essential IP ownership Bank only Dispersed Pricing Cost-plus Asymmetric across two sides Value for End User Bank only Ecosystem Controller of process Bank only Dispersed Dominant innovator Bank App Developers
  9. 9. Management Style THE CURRENT NORM MOVING BEYOND THE NORM Product Architecture Platform Architecture Growth bottleneck Add customers for specific products Attracting both sides to Platform Two Complementary Sides Chosen Not Applicable Fundamental Innovation mode Deliberate Emergent Management model Business Unit Command and Control Orchestration Critical success factor Good Bank Management Orchestration Key tension Bank meeting customer need Partner Autonomy versus Process Integration
  10. 10. Mirroring Architecture and Governance • The way in which a platform is governed and the way in which it is architected must be mirror images of each other in order to be mutually reinforcing. • If apps are loosely coupled with the platform, their developers must have considerable autonomy from the platform owner. • If they are tightly integrated with the platform, the platform owner and app developers should be tightly integrated in their work as well. Platform Ecosystem Architecture Platform Owner Ecosystem Organisation App Developer App App App App Developer App Developer Mirror Images 1 2 Architecture Governance
  11. 11. New Data, New Insights, New Journeys, New Governance The Norm 1) Data on the customer’s direct engagement with the bank 2) Insights on standardised customer needs in the mass-market 3) The customer’s journey once they enter the bank 4) Very infrequent and rare new products/channels aimed directly at the mass market Beyond the Norm 1) Data on the customer’s ecosystem activities, obtained with customer consent 2) Newly visible customer needs surfaced by Developers leveraging Open Banking 3) The journey out into the ecosystem to insert the bank into the customer’s life 4) Continuous release of large numbers of APIs for partners and developer communities
  12. 12. PSD2: Recipe for Digital Transformation ● Data moving out of closed legacy systems through Open APIs ● Consolidation of financial data across multiple Banks ● Ability to improve customer experience by making use of specialized skills and techniques possessed by third parties ● Opportunity to attract new revenue streams through digital products and services
  13. 13. Open Banking: The opportunities Bank A Bank B Bank C Merchant Bank A Consolidated customer account and payment info across multiple Banks TPPTPP
  14. 14. Step 1 Comply Expose data securely Step 2 Reclaim Loyalty Become TPP Step 3 Digitally Transform Offer services beyond banking 2019 20202018 Plan beyond 2018
  15. 15. 15 Build internal and external developer ecosystems with an API marketplace. Manage identity, security, and privacy across your digital business. Make mobile and IoT devices integral to your digital business. Create real-time, intelligent, actionable business insights and data products. Platform enable your digital business with “micro-services” and “micro-integrations”. Open Technology for Agile Digital Business
  16. 16. WSO2 Open Banking ● API Manager ● API Security + SCA ● API Analytics ● API Monetization PSD2 Compliance ● API Integration ● Federated Authentication ● Fraud Detection ● Consolidated API Analytics ● Business KPI Dashboards TPP Provider ● Web/Mobile App Suite ● Insight Sales ● Required Integration Recommendations & Insights
  17. 17. https://openbanking.wso2.com/
  18. 18. Different views on Open Banking & PSD2 1. PSD2 compliance is a necessity (yet another requirement to meet) 2. Open Banking & PSD2 compliance is a new and exciting opportunity 3. We have been told that there is a model for this, and it would meet our needs 4. We know who/what to follow, let’s give it some time 5. Should we become compliant or not? 6. It really does not apply to us
  19. 19. Adoption Challenges | Pain Points ● Deadlines to be met, and limited time to spend on R&D ● New capabilities, unknown suppliers, too little information, lots of risk ● Poor visibility into regional/local regulators’ plans ● Changes and impact on systems, processes, staff and products ● Yet another unplanned expense, what kind of ROI does this bring? ● How to promote the use of new Open Banking technology?
  20. 20. The Need and the Opportunity ● Meeting compliance requirements of the regulators ● As a part of being competitive in the market ● Retaining customers by providing a better/superior service ● Expanding into a newer and broader financial ecosystem ● Stronger integration with upstream and downstream partners ● Better insights into how to optimise the business
  21. 21. The value of using WSO2 ● Proven track record of working with financial institutions of all sizes ● Standards-based API-M/Integration interoperates with COTS or bespoke tech ● Scalable deployment options: on-premise, *aaS/cloud, serverless, or hybrid ● Minimum impact/changes to existing internal systems and B2B integrations ● Structured training programs for IT staff, and focused workshops/hackathons ● Extensive community of local implementation partners ● Commitment to improve products/solution as per EBA and other EU standards ● Ready to use demos to share with your team or to impress your leadership
  22. 22. Resources ● More Information - http://wso2.com/solutions/financial/open-banking/ ● Try out WSO2 Open Banking - https://openbanking.wso2.com ● Open Banking On Demand Webinar - http://wso2.com/library/webinars/2017/08/wso2-open-banking-digital-transformation-through -psd2/ ● Open Banking Whitepaper - http://wso2.com/whitepapers/digital-transformation-through-psd2-and-open-banking/
  23. 23. THANK YOU wso2.com

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