How can banks benefit from enhancing the Third-Party Provider (TPP) services via Open Platform Banking.pdf

Enhancing Third-Party Provider (TPP) services via Open Platform Banking can offer several benefits to banks. Open banking refers to the practice of sharing financial information with third-party providers through Application Programming Interfaces (APIs). Here are some ways banks can benefit from enhancing TPP services via Open Platform Banking

1. 1/23/24, 4:54 PM How can banks benefit from enhancing the Third-Party Provider (TPP) services via Open Platform Banking
https://techwave.net/how-can-banks-benefit-from-enhancing-the-third-party-provider-tpp-services-via-open-platform-banking/ 1/11
FINTECH
HOW CAN BANKS BENEFIT FROM ENHANCING
THE THIRD-PARTY PROVIDER (TPP) SERVICES
VIA OPEN PLATFORM BANKING
The Open Platform Banking is set to usher in customer-centric business models and banks’
current product-centric mindset might take a backseat if they don’t act fast.
Studies have shown that one in fiv e US consumers find Open Banking v aluable with interest much
higher among millennials and Gen Z. Allured by the flexibility and transparency, they are willing to
connect or export their financial data t o Third-Party Providers (TPP) like – fintech firms and star t-
ups, neo-banks, payment service providers, tech and retail companies, and licensed merchants.
What are the modern banking problems that paved the way for
Open Banking Platform?
Traditionally, end-users were more connected with the physical presence of banks. However, with
the advent of digitalization and the subsequent slew of banking sector disruptions like – online
banking, mobile banking, neo-banking, etc., end-users became more concerned about:
Secure online financial tr ansactions
Transparency w.r.t. how your banking data is handled
How much control you have over who can access the data
Solutions that simplify e-commerce (B2C), particularly in the wake of the pandemic
B2B digital payment solutions
Real-time financial tr acking tools
Personal Finance Management tools
Specific debt monit oring tools
This created an opportunity for Third-Party Providers (TPP) to innovate and bridge the gap
between banks and end-users. Thus, paving the way for disruptive banking technologies like –
Open Banking, also known as Open Bank Data.

2. 1/23/24, 4:54 PM How can banks benefit from enhancing the Third-Party Provider (TPP) services via Open Platform Banking
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Democracy knocks on banks’ door
The European Union pieced together the Payments Services Directive 2 (PSD2) to boost the Open
Banking System in 2018 under which, financial ser vices organizations in the 27-member nations
are required to give consumers control over their financial data.
In the United States, an increasing demand for portability of personal data as part of Open
Banking Technology has prompted the Consumer Financial Protection Bureau (CFPB) and federal
regulators to consider mandating Open Banking Solutions like PSD2.
The Biden administration threw its weight behind Open Banking Platform with the July 9, 2021,
executive order – Promoting Competition in the American Economy. Yes, on the policy front, Open
Banking is set to get its due right sooner if Biden administration’s order is any indication. It is now
the turn of the banks to scout for new pastures of growth with Open Banking Technology.
How can banks become pioneers in a disruptive, data-driven
financial world?
Banks and financial institutions will ha ve to look at cutting-edge technologies to increase the
existing revenue streams and to find new sources. Open Banking is a step in this direction.
Succinctly put, banks can enable third-party financial service providers, open but regulated access
to consumer banking, transaction, and other financial data fr om banks and non-bank financial
institutions via Application Programming Interfaces (APIs).
Open Banking facilitates the networking of accounts and data across institutions for use by
consumers, financial institutions, and thir d-party service providers. It is thus, an innovative
disruption poised to rearchitect the banking industry.
But how?


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
Multi-directional data flow
Banks will have to expand their APIs beyond single direction connections to provide new
financial services and products in a fast, elegant, and user-friendly manner; while at the
same time moving on to a more connected, data-driven financial world.

Customer Acquisition
By upgrading and building new technologies and tools for Open Banking, banks can align
various siloed departments of the organization to increase customer convenience,
loyalty, and referrals.

Digital Agility
The Open Banking Services APIs can help banks optimally leverage their data internally
and personalize customer services such as front-end applications.


4. 1/23/24, 4:54 PM How can banks benefit from enhancing the Third-Party Provider (TPP) services via Open Platform Banking
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Why must Banks partner with Fintechs in the disruptive
financial trend called Open Banking Technology?
The distinctive lines between industries are blurring rapidly. Today, we have non-financial
companies leveraging value from fintechs to create newer customer-oriented products. For
example – an Italy-based utility company – Enel, is collaborating with the Swedish fintech – Tink
to launch an account aggregation solution, and with SIA to create mobile banking solutions.
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With this kind of competition, what must be the next logical
step for banks to benefit fr om the estimated $400+ billion Open
Banking Economy?

Compliance
Open Banking System facilitates compliance practices that are equally benefitting for
both the entities – banks and TPPs. Higher standards of compliance imply the
elimination of unnecessary costs like fees and fines, thus, pr omoting profitability.

5. 1/23/24, 4:54 PM How can banks benefit from enhancing the Third-Party Provider (TPP) services via Open Platform Banking
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Banks will have to build a more robust and seamless system to provide newer services and
products to their customers.
This requires banks to foster a culture of data-sharing through advanced tools and analytics
like artificial intelligence (AI) and machine learning (ML).
However, unlike fintechs that have a very dynamic tech-driven business model, banks are not
built to facilitate a similar agile technological ecosystem.
As fintechs are armed with a plethora of tools and applications, banks can set up new
platforms which can act as a means to create synergies by building new customer
experiences.
Hence, it is prudent to say that banks stand a good chance of competing in the revolutionary
Open Data financial ser vices ecosystem by collaborating with fintechs.
This will empower them to leverage the strengths of fintechs t o facilitate data-driven
decision-making, innovation of customer-relevant products, and maximize customer growth.
What is holding back the tech leaders of banks from seamlessly
adopting Open Banking Solutions?
It is encouraging to notice a larger percentage of banks waking up to the potential of the Open
Banking System.
However, it is also visibly clear, how tech leaders of banks must navigate the dilemma of
integrating the innovative technology with their core banking systems. To be more specific and in
simpler words, tech leaders of banks must battle the following roadblocks:
Integrating with legacy technology.
Rearchitecting their corporate culture.
Attracting the right talent to design and implement the Open Banking Software and APIs.
Timing the shift in technological upgrades and adoptions.
Deliberating on ‘which’ and ‘how much’ of the confidential data needs t o be exposed to TPPs.
Longevity or relevance of the APIs invested in.
Budget considerations for tech transformations, especially for small and medium-sized
banks.
Lastly, the level of user-friendliness of the APIs; the less technical they look, the more value it
would add to its functionality.
How do APIs facilitate seamless adoption of Open Platform
Banking?

6. 1/23/24, 4:54 PM How can banks benefit from enhancing the Third-Party Provider (TPP) services via Open Platform Banking
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Remember, facilitation of speed and convenience by leveraging high-tech tools is a more
attention-intensive enterprise that Fintechs and other TPPs are experts at. The question to be
asked is – if it is prudent for banks to devote valuable resources for the same alongside managing
the conventional banking operations for an incredible number of customers?
Hence, collaborating with TPPs with the help of a competent API provider will enable banks to
retain customers by becoming an indispensable part of the big-tech revolution.
Also, when you say – Open Bank Data, it does NOT mean that banks are selling out their data in an
unregulated manner.
As part of the security and control of data, banks need to keep a tab on third-party relations using
access control, monitoring, and authentication through the API. It is important to know which APIs
to expose and to whom.
Putting in place services tailored to the customer’s needs with the vast array of API functionalities
will nudge existing customers to stay with the bank and will also bring in a fresh batch of
customers. But what will truly entice them are the reduced time and automated operations.
Deloitte summed it up best when the global professional services network wrote: “The bank of the
future will not succeed without a smart, cost-effective (customer) acquisition strategy, whilst also
delivering trust and awareness.”
Banks can embrace Digital Transformation with Techwave’s API
With its strong fundamentals, Techwave (established in 2004) has become the ideal choice of
many a bank in their digital metamorphosis.
Techwave’s proven track record has brought in new value for tech leaders in banks who are
looking to maximizing the business potential for their organizations.
With intelligent automation, industrialized assets, specialized skills, and global delivery
capabilities, Techwave has been accelerating the adoption of Open Banking. Our scalable and
interoperable applications are helping Third-Party Providers and banks switch over their core
applications and interfaces.
When helping banks to put together a seamless customer experience, Techwave ensures that
internal challenges are addressed to prevent digital transformation negativity. By developing
scalable, robust, and low-cost maintenance solutions, we ensure a single source for data across
enterprises to help banks reduce risks and enhance productivity.
Leveraging the API-led integration, Techwave’s seamless integration process is tailor-made. We
factor in all vital aspects like management, customer master, invoicing, and logistics.
Flexible and hassle-free, Techwave’s API service solution has earned kudos post-deployment. We
ensure that disruptions, costs, and complexities are balanced with the right architecture choices
which have proved successful globally.

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With an end-to-end digital architecture that leverages futuristic technologies, Techwave has set
the benchmark for seamless adoption of Open Banking Platform by banks, even those with legacy
banking premises!
Security Mechanisms to protect Consumers and Providers and
Enablers for Open Banking 
Open Banking lets consumers share their financial data with third-party financial products and
service providers. This sharing of data is done through APIs (Application Programming
Interfaces), which are a set of software rules that govern how different applications can interact
with each other. While Open Banking has the potential to increase competition and drive
innovation in the banking sector, it also raises important issues about security. Data sharing
between multiple parties is the prime concern amongst customers, and there is a greater risk of it
being compromised.
Know about the latest cyber security strategies leveraged
in the open banking sector
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To combat security challenges in open banking, Techwave provides a simple, convenient, and
secure experience when customers are transacting. We’re committed to developing innovative
security mechanisms to protect consumers, providers, and enablers for open banking. For
instance, Techwave uses a robust framework to deliver high-quality banking software products.
We also use secure communication protocols to maintain privacy, integrity, and data
authentication.
In this article, we’ll explore some of the security mechanisms provided by Techwave that have
helped protect consumers, providers, and enablers of open banking. By implementing these
measures, organizations can ensure that their data is safe and secure, and customers can, in turn,
control their finances in a better wa y.

8. 1/23/24, 4:54 PM How can banks benefit from enhancing the Third-Party Provider (TPP) services via Open Platform Banking
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SSDLC
a. Adopt a Secure Software Development Lifecycle (SSDLC) and set up a governing body that
drives its adoption and continual refinement of the tools and processes
b. Publish the SSDLC process for community reviews. This might seem a risk initially, but
research has shown that community-driven initiatives result in more mature processes
c. Build using highly curated and approved open source libraries.
d. Adopt shift-left as a mechanism to anchor all development practices to security
Networks
Build
Secure Communications
Databases
Identity Management
Logs, Exports, Notifications
Archive
Playground
Techwave has enabled a secure authentication platform for providers and consumers. Also, it has
permitted them to meet the stringent security requirements of open banking initiatives.
With our experience and expertise in developing innovative security products, we are well-placed
to help our clients address the challenges posed by open banking. Techwave’s solutions have
helped several organizations stay one step ahead of evolving cyber threats.

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