PSD2, the regulation behind Open Banking
To answer what Open Banking is, we have to look at what is known as PSD2. The ‘second Payment Services Directive’ is a regulation that came into effect in the EU in 2015 and was implemented by European member states in 2017.
PSD2 redefines payment authorisation across the industry, resulting in three main benefits:
- Increased customer rights;
- Enhanced security through Secure Customer Authentication;
- The ability for third-party providers (TPP) to access account information.
Whether through regulation or by choice, the core benefit of Open Banking is the ability for the industry to expand their current business model and create entirely new ecosystems that attract customers who otherwise weren’t even in their periphery.
Collaborating with FinTech and other third-party providers becomes easy through the use of open-source APIs. Application Programming Interface (API) acts as a software bridge that enables multiple applications to ‘talk’ to each other. An API architecture combined with Open Banking allows; financial institutions to gain additional revenues from products and services; increases market share from other providers; and empowers banks to remain the cornerstone for financial solutions.
Consent management determines if the data that you store, collect and use is in compliance with data security regulations. Having a solid consent management platform is vital to protecting and securing information for your users and contributors.
Great, so now you have an API Platform able to process millions of data streams, you have a proper consent management platform that stores this data securely. Now how do you make sure that the right parties have access to the right parts of the platform. This is where a strong Authentication process comes in. It labels and authorises who has access to what.
What to look for in an Open Banking solution
There are three aspects to keep in mind when looking for your Open Banking solution. API-platform, Consent Management, strong Authentication. These aspects form the foundation of your integration solution.
Technologies we believe in for your digital transformation
The future of finance is here. Leap forward with Yenlo and gain access to untapped markets
The time to adapt and be ahead of the curve is now. With Yenlo’s bespoke Open Banking API-first approach your organization is empowered to shape the financial landscape. Get in touch to learn more about our state-of-the-art Open Banking solution.