Exploring Open Banking Trends, Security, & Innovation: Rohit Srinivasan, MD & Global Delivery Head, Brillio

In an exclusive interview with Dataquest, Rohit Srinivasan, Managing Director and Global Delivery Head for Banking, Financial Services, and Insurance at Brillio, sheds light on the impacts of open banking on the financial sector. Open banking is something transforming the financial sector, fostering innovation, and reshaping traditional banking models. The collaborative approach between traditional banks, fintech startups, and third-party providers is fostering a competitive landscape, giving rise to innovative partnerships and a proliferation of new financial products.

The interaction addressed the transformative forces of open banking, emerging trends, regulatory developments, and how technology can be leveraged to enhance security and user experiences. Srinivasan also discussed collaborative ecosystems, the rise of embedded finance, and the central role of the API economy. He highlighted the importance of alternative data sources, AI-powered data analytics, and the emphasis on user consent and control over financial information.

Excerpts

DQ. In what ways has open banking driven innovation in the financial sector? What impact has it had on traditional banking models?

Rohit Srinivasan: Open banking has emerged as a transformative force in the financial sector, fostering innovation and reshaping traditional banking models. As financial institutions embrace open banking, it has unlocked new avenues for customer-centric solutions, enabling personalized services and experiences.

• Superior customer experience: User-centric solutions that leverage data-driven insights into customer behavior and preferences enable financial institutions to personalize their offerings and provide hyper-relevant financial products and services, leading to a significantly enhanced customer experience.
• Increased competition and new product offerings: By breaking down barriers to entry and enabling collaboration between Banks and FinTechs, open banking has fostered a more competitive landscape. This collaboration has given rise to innovative partnerships and led to a proliferation of new and innovative financial products and services, catering to diverse customer needs.
• Data-driven insights: The availability of extensive financial data has empowered institutions to derive actionable insights. Data analytics and artificial intelligence are being leveraged to assess risk more accurately, tailor financial products to individual needs, and enhance fraud detection mechanisms.

Open banking has compelled traditional banking models to undergo a dramatic shift, adapting to increased competition and the unbundling of financial services. This has enabled the exploration of new business models and revenue streams, while effectively addressing compliance and cybersecurity challenges to ensure sustained relevance and profitability in an evolving financial landscape.

DQ: Elaborate on the emerging trends within open banking, especially collaboration, data-sharing, and the broader landscape of digital transformation.

Rohit Srinivasan: Open banking is driving a paradigm shift with emerging trends that underscore collaboration, data-sharing, and digital transformation. Within the collaborative ecosystems, traditional banks, fintech startups, and third-party providers are seamlessly integrating their offerings, fostering innovation, and delivering end-to-end financial solutions. We are also witnessing the emergence of new players like big tech and telecom companies. This is driving the rise of embedded finance, where financial services seamlessly integrate into non-financial applications and platforms. The API economy is central to this concept, serving as the building blocks for interconnected and interoperable financial services, extending beyond traditional banking channels.

While robust data security and privacy remain paramount, there will be a rise in the use of alternative data sources beyond traditional financial records. This includes leveraging insights from social media, wearables, and e-commerce platforms to provide a more nuanced understanding of customer behavior and risk profiles. Additionally, the use of AI-powered data analytics will become increasingly prevalent, enabling banks to effectively analyse vast volumes of open banking data. The foundational element to all this is, of course, the emphasis on user consent and control over financial information that ensures compliance with ever-evolving and expanding data privacy regulations.

As open banking evolves, customer experience will become increasingly central, with institutions striving to deliver hyper-personalised and seamless experiences through real-time account aggregation, context-aware financial recommendations, and intuitive user interfaces. This necessitates investments in cloud infrastructure, agile development methodologies, and a culture of innovation.

DQ: What regulatory developments do you foresee in open banking in the near term? How might they impact the industry?

Rohit Srinivasan: Open banking is poised for significant growth, and regulatory developments will play a crucial role in shaping its trajectory. Several key trends are likely to emerge:

• Enhanced data privacy and security: Regulators are expected to fortify measures to address the heightened sharing of sensitive financial information. Stricter guidelines are expected to ensure that both financial institutions and third-party providers implement robust security measures, thereby fostering increased trust within open banking ecosystems.
• Global standardisation of open banking APIs: We are witnessing a global trend toward standardisation to ensure interoperability and consistent practices, facilitating cross-border collaboration, and expanding open banking principles on a broader scale.
• Open finance expansion: Open banking’s scope is expected to expand beyond payments to include lending, investments, and insurance, creating new collaborative and innovative opportunities across the financial services landscape.
• Regulatory sandboxes and innovation hubs: These sandboxes provide a controlled environment for testing and experimenting with new open banking technologies and services. This approach allows for innovation while maintaining regulatory oversight and managing potential risks.
• Regulatory oversight of third-party providers: Increased scrutiny of third-party providers accessing open banking data is expected, promoting ethical standards, and enhancing consumer protection.

DQ: How can financial institutions leverage technology to enhance security and user experiences within the open banking framework?

Rohit Srinivasan: Financial institutions can strategically leverage technology to fortify security and enhance user experiences within the open banking framework. Advanced authentication mechanisms offer a formidable defense against unauthorized access. Additionally, the adoption of tokenisation techniques in transactions mitigates the risk of data breaches by substituting sensitive information with unique identifiers, rendering intercepted data meaningless to potential attackers.

Ensuring the security of APIs is paramount in open banking, necessitating the implementation of secure APIs with robust encryption protocols for data transmission. Real-time monitoring enables financial institutions to detect and respond promptly to suspicious activities, reinforcing the security framework. The implementation of consent management platforms is essential, empowering users to control and monitor data access granted to third-party providers. Cloud infrastructure provides scalability and cost-effectiveness, while open banking APIs foster data exchange between institutions and third-party providers. Microservices architecture enables rapid development and deployment of new features, further enhancing user experiences.

Technology plays a crucial role in enhancing security, personalising user experiences, and unlocking the full potential of open banking. By embracing these advancements and focusing on user needs, financial institutions can create a secure, convenient, and rewarding open banking experience for their customers, ultimately leading to greater success in this rapidly evolving landscape.

DQ: Can you highlight any specific open banking projects or initiatives where Brillio has played a significant role in transforming financial processes or customer experiences?

Rohit Srinivasan: By combining our expertise in open banking technology, data analytics, and customer-centric design, we help financial institutions unlock the full potential of open banking, transforming financial processes and delivering superior customer experiences.

Our self-service and multi-tenant API sandbox empowers FinTechs and vendors to streamline costs by experimenting and innovating using mock APIs. This intuitive environment enables rapid development and testing of new products and services. Our out-of-the-box reference architecture for open banking implementation enables organizations to optimize and accelerate their go-to-market strategy. The open architecture can be customised to meet specific requirements, ensuring cost efficiency, flexibility, and scalability. With our data middle layer acting as a connector to various data sources, the integration process becomes smoother.

By isolating the impact on peripheral systems, we ensure a seamless integration experience with minimal disruptions, mitigating unwanted costs. Our comprehensive consent management flow provides a unified view for users, banks, and FinTechs to manage user consent for open banking APIs. It complies with strict Strong Customer Authentication (SCA) and other security regulations, ensuring data privacy, compliance, and cost efficiency, while also creating an inventory of services that warrant authentication and access controls and compliance with regulations.

Our solution is secured by advanced financial grade security standards such as FAPI and CIBA, built on OpenID Connect. Our zero-trust layered security architecture enables network segmentation, granular auditing, and authorisation, and can be quickly adapted to local consumer data security and open banking standards.

DQ: In what ways is Brillio aligning with the core principles of open banking, particularly in terms of driving innovation and enhancing customer experiences?

Rohit Srinivasan: We help financial institutions to optimise and accelerate their go-to-market strategy for open banking, ensuring cost efficiency, flexibility, and scalability. We actively encourage the exploration of real-world use cases for open banking. This includes enabling embedded finance and offering lifestyle finance through personalized services based on customer behavior data.

Our commitment extends to simplifying regulatory compliance within the open banking landscape. This approach reflects our dedication to maintaining a secure and compliant environment, aligning with the regulatory requirements that govern the financial industry. Furthermore, we recognize the significance of API monetization within the open banking framework. We help financial institutions understand various API monetisation models and explore their potential benefits, thereby generating additional revenue streams through value-added services, embedded banking, and open finance.

Our holistic approach to open banking emphasizes innovation and experimentation, providing a flexible architecture, streamlining collaboration processes, prioritising comprehensive consent management, and adhering to advanced security standards. These efforts collectively contribute to enhancing customer experiences in the evolving landscape of open banking.