Innovating with Cloud and Open Banking in MuleSoft

The banking and financial industries are facing unprecedented changes. Consumers are now readily relying on technology to use responsive and customer-driven services to do their day-to-day tasks. Banks will need to swiftly respond by innovating business models focused on convenience, security and digital transformation.

FinTech start-ups are disrupting the banking landscape and are forcing traditional banking institutions to stay relevant. Integrating cloud solutions and migrating to the cloud are one of the major transformations the industry is undergoing. Cloud can help fully digitize processes, improve efficiency, scalability, cut costs, and improve security. Alongside cloud, open banking is simultaneously revolutionizing the industry.

In the past, the financial sector has been hesitant in adopting cloud strategies due to the governmental regulations that did not permit the use of public clouds since data security was thought to be vulnerable. Now that the security problems have been addressed, banks can now offer customer centric, consistent experiences and relationships with their customers.

Open Banking in the Cloud

Cloud minimizes the friction that comes with configuring and operating IT systems. With cloud, banks can also adopt to work with IaaS (Infrastructure as a Service), PaaS (Platform as a Service), SaaS (Software as a Service) and DaaS (Data as a Service). This allows for agile, multifaceted development to add extensions such as blockchain, artificial intelligence and machine learning.

Cloud is the basis for Open Banking to function and relies on providing users with a network of financial institutions’ data through the use of API’s.  According to PwC, the open banking market will reach $ 7.2 billion by 2022.

Open Banking provides customers greater accessibility to share their financial data with other financial institutions and makes it easier to transfer money and compare product offerings across institutions. Open Banking regulations necessitate transparency which lets consumers evaluate a bank’s service qualities and is designed to provide an enhanced customer experience. It also makes it easier for customers to switch between banks when, for example, using their checking account on an app.

The Open Banking API’s can provide consumers and other institutions with a more accurate picture of their finances and financial capabilities when looking at all of their accounts concurrently. Open Banking is also a secure and reliable way to give providers access to financial information which requires banks to release data and provide access to payment transactions so that approved organizations can utilize the data for their own consumer applications.

Building Open Banking on the cloud is necessary to build unified API’s on multiple Microservices, scale API’s based on demand, innovate faster and implement high levels of security. Open Banking also threatens legacy banks and older financial systems through the increase of competition and the need to make costly investments into these new technologies. However, it also challenges them to take the leap and grow with their customers as they require more seamless, interconnected services.

HSBC Partners with MuleSoft to Enable Open Banking

HSBC is one of the largest banks in the world, and serves more than 40 million clients worldwide. It is also a testament to the strength of technical innovation in the financial sector.

HSBC had to have a digital platform powered by APIs to become a bank of the future. The team collaborated with MuleSoft to introduce an API-led connectivity strategy that allows the bank to use APIs to extract data from legacy systems and applications. HSBC is developing APIs that securely enable access to core banking products, strengthening communication with customers, driving creativity and opening new income channels with its Anypoint API Community Manager.

HSBC has developed APIs for core banking services–including credit cards, mortgages and payments. In order to develop the Nudge app, for example, HSBC's team used internal APIs like the accounts API and the transactions API. The app helps consumers manage their finances by saving and spending less, as well as suggesting tailor-made products and services.

The growth of PSD2 and open banking require financial institutions to share customer information through APIs with third-party developers. The modern battlefield has become the linked consumer interactions. Banks are facing a transition where they need to switch from sales to personalized experiences and digital customer services. HSBC uses an API approach to develop a digital platform and to co-create new products with a wider development system and partners' ecosystem.

HSBC has four times more innovation speeds, since releasing Open Banking APIs - delivering customer experience and building new partnerships, with its API and API approach. Dinesh Keswani, group CTO and CIO of retail digital banking at HSBC, said in a statement:

“HSBC is ... moving to serving customers across multiple online and offline channels. With MuleSoft, HSBC has built thousands of APIs in an application network and deployed them across multiple environments to deliver new and consistent experiences. We’ve been able to reduce our app development time by 75% and release new functionality to consumers every two weeks versus once a quarter.”


1 Response

  1. While open banking looks like something that would threaten legacy banks, but it also presents a great opportunity for them to innovate and capture the market. Big banks around Europe are approaching open banking in various ways. Some banks are experimenting by providing their retail customers with additional services such as paying for parking while others are providing their SME clients with access to accounting software. A large section of them is productizing the information aggregation by giving them dashboard on their mobile apps through which they can navigate their entire financial portfolio. While all these applications and innovation surrounding open banking are great we are yet to see an aggregator approach where bank not only provides its products or services but binds them together with 3rd party auxiliary services to drive efficient cross-sell. Most of the banks today provide only customer and account information through the APIs as directed via PSD2. I have not seen a single bank that has APIs carrying product information to 3rd parties. While the sensitivity of the data is very well understood but unless it is shared with trusted 3rd parties, true innovation coming into the financial realm seems far fetched.

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