IBM RegTech Innovations

Capitalizing on Open Banking as a catalyst for digital transformation

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There’s a new normal in financial services. Regulations such as the second payment services directive (PSD2) and the Open Banking project spearheaded by the UK’s Competition and Market Authority (CMA) are driving disruption in the banking value chain. Customer behaviors are changing, making it necessary to find new ways of interacting and creating engagement. Meanwhile, new competitors are entering the market and tearing up the traditional banking rule book.

From a revenue perspective, today’s global banking industry is characterized by low return on equity (ROE), slow growth, and the imposition of strong cost controls. There’s an urgent need to accelerate digital transformation to help banks overcome these challenges and take advantage of new revenue channels.

However, for most organizations, a rip-and-replace strategy is not a viable option. Reengineering core banking systems that have been developed over decades while innovating fast enough to stay competitive would be like trying to change your tires while speeding down the freeway.

Embracing change

So, how can financial institutions transform rapidly and flexibly, while maintaining their investments in core systems? At IBM, we believe that renovation is the right option. Take an incremental approach, prioritizing by business domain, responding to new regulations and keeping the customer experience front-and-center throughout.

In this way, adapting to the new open banking world can be an opportunity rather than an ordeal. It gives financial institutions the chance to open up legacy systems and harness APIs to deliver better services to customers and lift profits.

Gearing up for a new era

To facilitate digital transformation for financial institutions, we’ve developed the IBM Open Banking Platform, a software suite designed to enable fast creation of next-generation apps, low-risk innovation and regulatory compliance.

The IBM Open Banking Platform includes modular tools based on industry standards including the Banking Industry Architecture Network (BIAN), Information Framework (IFW), and other open banking guidelines. Built on Kubernetes and optimized for IBM Cloud Private, it’s powered by IBM API Connect and Watson technologies.

Bridging the gap between core systems and the cloud, the IBM Open Banking Platform acts as a microservices layer on top of your existing environment to enable easy, plug-and-play integration. In short, it enables you to augment and revitalize your existing systems, rather than undertaking the cost, effort and risk of a complete overhaul.

Accelerating the path from closed to open banking

Using the IBM Open Banking Platform, banks can open up existing systems and share them internally as microservices using modern architectural tools. By exposing banking microservices as APIs in the cloud, you can enable new channels, nurture FinTech collaborations, and unlock additional revenue streams.

Featuring an ecosystem that contains APIs from IBM Financial Services and third-party Fintech companies, the IBM Open Banking Platform allows you to participate fully in the API economy. Specifically, you can choose from a wide and growing range of APIs to add capabilities such as financial risk assessment, payments, artificial intelligence (AI) and blockchain to your apps.

For example, by augmenting your existing analytics tools with new AI services, you can harness the full potential of your customer account data, extracting valuable insights that enhance banking functions and enable new digital products and services.

PSD2 is a key focus area of focus for many financial institutions, so transforming payments is a natural place to start. In response, we’ve developed the IBM PSD2 Payment Solution, which works with the IBM Open Banking Platform to help clients enable PSD2 standards-based payments from their core banking systems.

Ready for anything

With the IBM Open Banking Platform, financial institutions can innovate faster, reduce risk and protect core banking applications. You can embrace new ideas, build new Fintech partnerships and respond faster to changes in the marketplace. You’ll gain the tools to create cloud-native solutions that incorporate the latest advances in mobile, AI and blockchain technology.

The future of banking isn’t just about modernization or churning out apps. It’s about re-thinking banking models to create new approaches that are open, intelligent and agile. The IBM Open Banking Platform provides a risk-managed path to digital transformation, so you can achieve fast time to market and stay ahead of regulatory requirements. As a result, you can not only meet evolving customer needs and boost profitability—you can reimagine the architecture of financial services and transform the future of banking.

Learn more about IBM Open Banking Platform at ibm.com/industries/banking-financial-markets/openbanking.

To sign up for a demo or IBM Design Workshop, email us at

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