A Project Submitted to

University of Mumbai for partial completion of the degree of

Master of Commerce (Banking & Finance)

Under the Faculty of Commerce

By Hitanshi Jain

SEMESTER IV SAP ID: 45210190012

Under the Guidance of Prof. Harminder Oberoi

SVKM’s Narsee Monjee College of Commerce and Economics

(Autonomous)

APRIL 2021

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 SVKM’s Narsee Monjee College of Commerce & Economics
(Autonomous)
Certificate
This is to certify that Ms. Hitanshi Jain has worked and duly
completed her Project Work for the degree of Master in Commerce
(Banking& Finance) under the Faculty of Prof. Harminder Oberoi
and her project is titled, “A study on open banking : Opening
digital pathways for digital banking ” under my supervision.

I further certify that the entire work has been done by the learner
under my guidance and that no part of it has been submitted
previously for any Degree or Diploma of any University. It is her
own work and facts reported by her personal findings and
investigations.

Name and Signature of

Guiding Teacher
Date of submission: APRIL,2021

External Examiner Principal

(Signature & Date) (Signature & Date)
Internal Examiner
(Signature & Date)

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 DECLARATION

I the undersigned Ms. Hitanshi Jain here by, declare that the work
embodied in this project work titled “A study on Open Banking :
Opening pathways for digital banking” is own contribution to the
research work carried out under the guidance of Prof. Harminder
Oberoi and is a result of my own research work and has not been
previously submitted to any other University for any other Degree/
Diploma to this or any other University.

Wherever reference has been made to previous works of others, it

has been clearly indicated as such and included in the bibliography.

I, here by further declare that all information of this document has

been obtained and presented in accordance with academic rules and
ethical conduct.

Signature of the Student Signature of the Guide

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 ACKNOWLEDGEMENT

Every research big or small is successful largely due to the efforts

of a number of wonderful people who have always given their
valuable advice or lent a helping hand. I sincerely appreciate the
inspiration; support and guidance of all those people who have
been instrumental in making this research a success. I am grateful
to our Principal Dr. PARAG AJAGAONKAR, for giving me the
opportunity to do this research and providing his immense support
throughout the process of this research.

At this juncture, I am deeply honoured in expressing my sincere

thanks to my research guide Prof.HARMINDER OBEROI, for
directing me through the whole process of my research and
providing valuable insights leading to the successful completion of
my research.

My sincere thanks to all the teachers, Assistant Professors and

other faculty members of Narsee Monjee College of Commerce
and Economics (Autonomous) for their kind cooperation and
assistance throughout the research in learning new concepts related
to my research.

I would also like to thank all the library and non-teaching staff
members of our college for providing constant support and being
very cooperative and providing invaluable material for my
research.

Last but not the least I place a deep sense of gratitude to my family
members and my friends who have been constant source of
inspiration during the preparation of this project work.

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 INDEX

Sr no Particulars Pg no
1 Introduction 7
● USE CASES OF OPEN BANKING
● GLOBAL LANDSCAPE
● HOW OPEN BANKING IS IMPLEMENTED IN
INDIA
● IS INDIA READY FOR OPEN BANKING
● NBFC CREDIBILITY IS MAJOR CONCERN

2 Research methodology 18
● OBJECTIVE
● SCOPE
● DATA COLLECTION
● LIMITATIONS OF THE STUDY

3 Literature review 20
● EMERGENCE OF OPEN BANKING
● HOW DOES IT WORK?
● WHAT IS OPEN BANKING?
● WHAT CAN IT DO FOR CUSTOMERS?
● OPEN BANKING ECOSYSTEM
● OPEN BANKING & APIs
● TOP INDIAN PRIVATE BANKS ENABLING
INNOVATIONS IN OPEN BANKING
● THE RISE OF NEO BANKS
● TOP NEO BANKS IN INDIA
● WHO WILL GET BENEFITED WITH OPEN
BANKING?
● OPEN BANKING STANDARD IN INDIAN
CONTEXT

4 Data interpretation 57
● SURVEY INTERPRETATION
(QUESTIONNAIRE)
● ARE BANKS READY TO HANDLE
DISRUPTIONS IN BANKING SECTOR?
● CHANGES CUSTOMERS WANT THEIR BANKS
TO MAKE
● YES BANK (EXAMPLE)

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 ● IMPORTANCE OF OPEN BANKING &
ANALYTICS IN THE INDIAN BFSI SECTOR
● OPEN DATA & OPEN BANKING: WHAT DOES
FUTURE HOLD?
● ADVANTAGES & DISADVANTAGES OF OPEN
BANKING
● THE CHALLENGES AND OPPORTUNITIES
● OPEN BANK:OPEN RISK
● BIG TECHS:BIG BENEFICIARY OF OPEN
BANKING?

5 Conclusion 99
Annexure 102
Webliography 106

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 INTRODUCTION

Big changes are on the horizon. You may have seen or heard about Open
Banking, PSD2, and CMA in the news over the past year. Or, you may be
hearing about them for the first time right now.

Fortunately, Open Banking is right here and it is going to stay.

In the banking sector, the concept of “open” can seem contradictory. Banks
traditionally have a “duty of care” to protect their assets rigorously, as required
by regulators and customers.

Traditional Banking has been the same for…just about forever. For the most
part, the power dynamic between banks and their customers has stayed about
the same. Whether you bank in person, over the phone, online or mobile, the
relationship with banks hasn’t changed much alongside the technological
advancements. You set up an account with your bank, they facilitate the ebb
and flow of your money, and, as a result, they hold the data around that
money. All of the histories around your purchases, loans, payments, debits,
and credits rests with them.

Now banking is about to undergo a major shift.

With the ‘Open Banking’, (the outcome of the beautiful blending of Financial
and Technology sectors), all of that is going to change.

The banking sector has undergone immense changes in the past few years as
non-traditional players—including fintechs and neo-banks—entering the
global marketplace. ‘Open Banking’ is one such disruption that is going to
change banking forever. To counter the rising competition, banks are taking a
closer look at Open Banking.

Open Banking is creating a data architecture, where a network of institutions

can share the data through Application Programming Interfaces (APIs). These
APIs allow the financial companies and banks to share the data amongst them,
in turn helping them to serve their customers better. With this approach, the

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banks can provide tailor-made financial products to their existing customers,
particularly payment solutions.
If this happens, it would open the doors to a lot of innovations and
entrepreneurship opportunities for the financial institutions, and at the same
time benefitting the ‘customers’.

The European Parliament has implemented a Revised Payment Services

Directive (PSD2) in October 2015. This move enabled a new type of banking
service that uses innovative online and mobile payments. Also, by August
2016, the United Kingdom’s Competition and Markets Authority (CMA)
advised nine of the biggest banks (Barclays, RBS, HSBC, Santander, Bank of
Ireland, Allied Irish Bank, Danske Bank, Lloyds, and Nationwide) to allow
licensed third-party direct access to their data.

However, open banking has emerged with the unveiling of the Indian
Government’s Unified Payment Interface (UPI). While Open Banking is
steering waves on a global scale for long, India joined the booming
bandwagon only a couple of years back. It all started in 2013, when YES Bank
and RBL Bank exposed their API to other developers to build innovative
financial services. Subsequently, ICICI, RBL Bank, Kotak Bank, DCB Bank,
and several other banks and financial institutions have adopted this approach.

When in place, APIs help a bank to do several things such as integrate with
Enterprise Resources Planning (ERP) systems of corporate clients, perform
e-KYC, PAN verification, offer currency rates, retrieve credit scores, offer
lending and payment products, collaborate with third parties to create
innovative products, and much more.

The Open Banking standard defines how financial data should be created,
shared and accessed. Benefits include easy transferring of funds and
comparing product offerings to create a banking experience that meets each
user’s needs in the most cost-effective way.

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Mobile wallets exploded nationwide and more people from both rural and
urban India started opting for digital payments for goods and services, raising
hopes for sustainable growth for non-cash payments.

Demonetisation,has paved way for a lot of new products like Unified Payment
Interface (UPI), which has opened up payments transaction systems. With this,
we are opening the transaction field to various channels and fintechs. We have
seen a lot of brands offering payment systems in regional languages. This will
help those who were hesitant earlier to use digital platforms. That’s how the
system will grow.

Post-demonetisation, the upswing in the adoption of digital transactions has

been great. It has helped us fast-track the process, which earlier used to take
three to four years. Prior to demonetisation, only five percent of transactions
were done in digital form. However, now we have touched double-digit in
transactions.

Earlier people used to visit banks for checking their account or updating their
passbook. However, in the past few years, with technology, things have
changed. Today, people are opting for digital transactions and also using
mobile applications to know their bank balance, pay their loans or transfer
money.

With evolving technology, now the banks are providing maximum services to
their customers at one click. An Open Banking model, APIs, and fintech
partnerships provide opportunities for the survival of traditional banks.
Application programming interfaces (APIs) allow third-parties to access the
financial information of the customer. With Open Banking, third-parties can
help you save money, get loans easily, and pay then effortlessly as well. While
Open Banking allows third-parties to access the required information from the
concerned banks, the banks’ in-turn can utilise this platform as a medium to
improve the service they want to offer to their customers.

In the new ecosystem of Open Banking, APIs have emerged as a powerful

channel for doing business.

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USE CASES OF OPEN BANKING:

● Account Aggregation: Giving customers the ability to aggregate

and consolidate all of their financial information on one platform. In
Bahrain, this includes aggregating your current, savings, deposit,
loan accounts in addition to your credit cards as well to help
customers better manage their finances. With all of this combined
and integrated, banks are in a better position to understand their
customers’ overall financial behavior.

● Personal Finance Management Tools: Third-party providers can

offer customers easy to use to tools that would enable them to sort

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 out their financial portfolio. Some of the most popular features
include investment aggregation & tracking, automated savings, and
product switching.

● Seamless Payments: Open Banking enables direct account to

account payments which can significantly reduce the cost by
eliminating card processors completely. It also financial institutions
to increase the time and attention it has from customers enabling
them to execute all their transactions from one place.

● Product comparisons: Do you want to apply for a loan but don’t

know how to choose to right one? Through the use of open APIs
and advanced data analytics, open banking platforms can
recommend the right products to customers based on their spending
behavior.
● Lending and credit risk: The amount of time required for customer
onboarding or the application process can substantially decrease
through the use of financial data.
● Financial data can offer the insights needed to make a genuinely
informed decision that helps eliminate any risks the bank can incur.

POSSIBLE EXAMPLES OF OPEN BANKING:

● Cash Management System/Money Management System

How many bank accounts does a person have? An individual may start with a
savings account during his school/college life, that then gets turned into a
salary account. Pursuing higher education with an education loan means a new
bank account with the concerned bank, that could also extend to a home loan
account, car loan account and even personal loan account.

But how do you keep track of the credit/debit of all of these accounts?

If all of the bank accounts build an open API that lets a third party read the
transactions, all of this data could be exported into a mobile app. Taking a step

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further if the individual grants permission to the third party, they could also
transfer funds to other accounts.

● Integration with Artificial Intelligence [AI] apps

Would you like to turn any of your screens into a bank? Be it when you visit a
branch that has an LED display or from your tablet/laptop? Coupling Open
API and interactive screen with the help of voice and gestures could formulate
a digital environment that is similar to visiting a bank branch.

● Paperless Cheque Deposits

A possibility of scanning the cheque via an app or reader and converting them
instantaneously into Digital Cheque. Sending it to the concerned person,
where the person deposits it in a virtual drop box and processing is done.

● Cash Access

Every time bank provides us with debit or credit card, they charge it. Then
there is an issue always to carry it and most importantly stand in long queues
at ATM to get cash. Could our mobile phone or watch be turned into a debit or
credit card? An app or software when accessed ask for your pin and loads the
card of your choice, you either directly use it at any of the shops or get cash
dispersed from ATM by merely tapping it.

● Integration with IoTs

With voice assisted payments adopted in real life, it would be fascinating to

see Siri or Alexa making payments to DTH, electricity bills or at the weekly
grocery store. While cables, routers, kitchen appliances and many other
devices are getting smarter each day, Open API could let them communicate
with each other, thereby offering better connectivity and choices to the
consumer. I would be thrilled if my printer senses its cartridges is finished,
browse the internet and orders the best deal available.

● Personal Finance Advisor or Chatbots

Open API could help you balance your financial portfolio and even could be
your financial advisor. Software powered by natural language processing

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offers you to communicate with your advisor via a mobile app. It would not
only help in analyzing your spending’s and investments but also answer all
your queries. Who says – hiring a personal advisor is just for wealthy!

HOW WAS OPEN BANKING INTRODUCED?

The entire banking system in the UK was facing issues in the recent past -
people were paying more for overdrafts, money in current accounts was not
earning interest, switching banks was a very tedious process, etc. The UK
Competition and Markets Authority (CMA), in this light, recommended a
number of remedies to increase competition, encourage switching, deliver
customer value and drive innovation in banking. This allowed for an
opportunity to all payment service providers to operate on a level playing field
while also ensuring enhanced security and strong customer protection.

GLOBAL LANDSCAPE OF OPEN BANKING

Developed economies around the world are at maturity stage of implementing

open banking but only United Kingdom came up with the regulations and gave
it a big boost. In August 2016, CMA advised nine of the biggest banks in the
UK (Barclays, RBS, HSBC, Santander, Bank of Ireland, Allied Irish Bank,
Danske Bank, Lloyds, and Nationwide) to allow licensed third-party direct
access to their data.

● In the UK, Starling Bank has gained a first-mover advantage by

opening up banking APIs through a hackathon. Digital Banks like N26
and Fidor, and digital lenders (eg. Klarna) are reinventing the entire
banking landscape
● In the US, open banking was initially adopted by Capital One. To stay
in the game, other US banks such as Spanish Bank, BBVA and Sutor
Bank quickly followed by launching their own banking APIs
● In China, new digital finance ecosystems like WECHAT, ALIPAY
have emerged

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OPEN BANKING IN INDIA

India took a step towards open banking before many developed countries but
slow implementation and lack of defined legislature created hurdles in its
success.

CIBIL: India’s first credit bureau was setup in 2001 but Indian banks took 10
years to understand and execute the idea of sharing customer’s lending
information with the bureau. Bajaj Finance, an NBFC, proved how credit data
can be effective for a company’s growth.

Central KYC Registry: Then Finance Minister Pranab Mukherjee had

introduced the concept of KYC in the 2012 union budget. Although, 40
million KYCs had been done but still one had to go through KYC process
each time in order to open a bank account or a payment wallet

UPI: Indian Government did not have the regulation for the banks to join
payment interface. It was demonetisation, introduced in 2016, which forced all
banks to come on the payment platform.

HOW IS OPEN BANKING BEING IMPLEMENTED IN INDIA?

Beyond just reliability and performance, the biggest issue with these methods
of data aggregation is privacy. In order for these techniques to work, the user
must share their banking login and password with the data aggregator!
In contrast, “official” open banking flows can lead to a more secure end-user
experience (official flow meaning something in which the bank is in the loop
and offers built-for-purpose APIs, as opposed to an aggregator cutting out the
bank by finding hacks to get the data off the bank’s user interface). Consider
the case of India, which is implementing a system known as the Account
Aggregator framework (AA). As per the flows specified by this framework,
users are not required to share their banking credentials. Instead, users must
create accounts with specially certified Account Aggregators (these could be
mobile apps or web apps). These licensed AAs, as they are known, allow users
to discover their existing financial accounts (be they bank accounts, stock
trading accounts, insurance accounts, or taxpayer profiles).

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In addition to increased security for users, the use of official APIs can also
result in more convenience and reliability for consumers of data. For one
thing, the data itself comes from the source, oftentimes with a verifiable digital
signature. This brings down the cost and burden of verifying the data.
Secondly, the official APIs come with documentation and maintenance from
the banks, so consumers of the data are in the loop about changes or outages to
the APIs (although one must concede that some of the bank APIs in the EU
and UK are unreliable and uninspiring). Lastly, the APIs might allow for
richer functionality than what scraping allow. For instance, the AA framework
in India specifies standardized schemas for more than 23 kinds of financial
assets including bank accounts, credit cards, equities, bonds, mutual funds,
insurance policies, tax returns, and electronic invoices. The consumers of
these APIs know exactly the format in which they will receive the data; what’s
more, the AA API specifications allow for data consumers to ‘query’ the
original data. This means that users can instruct their bank to only share select
information with the data consumer, rather than just sharing it however it is
presented on the current mobile/web banking interface.

IS INDIA READY FOR OPEN BANKING?

At first thought it seems a sure Yes! It is possible, as today we make payments

using our phones for everything - whether it is an electricity bill, Netflix, Über
ride, Grofers, Amazon, Swiggy, you name it! So, do online payments account
for a major bunch of our country’s transactions?

The answer, unfortunately, is still a big No. A Credit Suisse report says cash
still accounts for 72% of consumer transactions in India which mainly
includes rural merchants, who prefer cash for transactions. The major
challenge is MSME businesses and unbanked individuals who do not have
access to formal credit.

Regulations have been relaxed a bit and the necessary policy changes have
been made to provide an access to formal credit to MSME businesses and
individuals who do not have any credit history. RBI has also granted NBFC
licence and has permitted only non-banking financial corporations (NBFCs) to

15
perform the role of account aggregators (AAs). So now NBFC-AA will be an
interoperability link between financial information providers (FIPs) and
financial information users (FIUs).

There is a hope that the cycle of open banking in India will be complete with a
combination of Aadhaar, CIBIL, UPI, CKYC, E-Nach and AAs.

Though nascent, partnerships between banks and fintech players are on the
rise. In 2013, YES Bank and RBL Bank exposed their API to other developers
to build innovative financial services. ICICI, RBL Bank, Kotak Bank, DCB
Bank and other a few others have accepted that the need of the hour is to
collaborate with the fintech players to remain exclusive and profitable in this
business in today’s world.Nikhil Kumar and Sahil Kini, who were part of the
team which had shaped the Indian financial technology revolution by
developing UPI, GSTN and Aadhar are simplifying the system for fintechs
with their startup SETU. This will provide a solid API platform which can be
used by developers to build fintech applications. Kunal Shah, who founded the
digital payments app Freecharge, has now also targeted the underpenetrated
credit card market with his newly launched app “Cred”.

HOW OPEN BANKING CHANGE TRADITIONAL BANKING?

The financial ecosystem is expected to become a level playing field for all
entities, banking and non banking alike, once data sharing becomes successful.
Opening a bank account is still considered a tedious task requiring tons of
verifications, but with Open Banking it would be done in minutes. In the same
manner, in today’s world, getting a personal loan takes 2-7 days but after data
interoperability, it can also be completed instantly. In a similar fashion,
opening a demat account, or taking home loan, vehicle loan or insurance - all
will be possible within a few minutes with open banking.

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MAJOR CONCERN NBFC CREDIBILITY

Though RBI is granting more and more NBFC licenses to increase the reach
of credit, we can’t forget the IL&FS and NBFC liquidity crisis which had
shaken the financial services sector. To reduce NPAs, technology led lending
is the solution which will keep a better check on borrower’s behaviour and
unlike traditional banking will not rely on subjective decision making of credit
officers and credit bureaus. Technology will guide in making data driven
objective credit decisions even in the absence of traditional creditworthiness of
data.With the initiatives by the government through the “Digital India”
campaign launched in 2015 and supportive regulatory framework, the timing
for digital financial inclusion is perfect. The Boston Consulting Group projects
that the digital lending opportunity in India is estimated to be ~ $1 trillion
from 2018-2023, which will be led by retail and MSME loans.

OPEN BANKING’s IMPACT ON THE MARKET

Open banking benefits small businesses over the market leaders because it
opens up new avenues for opportunity. New businesses can now enter the
market with smaller, more affordable alternatives to traditional financial
services. Larger, established banks will have to work hard so as not to be
disrupted by the market newcomers. The intent of this is to drive down costs
while encouraging the adoption of modern technology and improved customer
service. Rather than simply administering financial transactions, taking
advantage of open banking can allow all institutions to form relationships with
their customers.

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 CHP 2 : RESEARCH METHODOLOGY

RESEARCH SCOPE:

The rationale for the study of OPEN BANKING arises on account of the fact
that there are many alternative components in the banking system due to rise
in technology. This research is broadly concerned with how new-age
applications continue to disrupt the current banking systems in remarkable
ways.​ Open Banking examines the change in infrastructure of banking,
reasons behind gaining popularity, legal & regulatory risks, application in the
real world, concept of APIs & Neo Banking, banks meeting AI & IoT and
how these topics relate to the financial & banking system.

RESEARCH OBJECTIVE:

● To study how open banking can drive innovation and growth in the
banking system.

● To study how technology is playing an incredibly significant role in

dealing with the complex, tangled process that is probate and the
potential of open banking in radically enhancing what we are already
doing.

● To study how Open or ecosystem banking will benefit customers by

expanding their product options, and financial service providers by
expanding their reach.

● To study how technology can strengthen business resilience in the post

covid era.

● To study the impact of digital economy on the banking & payments

sector.

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 ● To study the growing importance of APIs to banking sector.

DATA COLLECTION:

PRIMARY DATA:

● Questionnaire was prepared and survey was conducted on that basis.

SECONDARY DATA:

● Internet sources

● Newspaper

LIMITATIONS OF THE STUDY:

● Due to time constraint, detailed study could not be done.

● This project is at its nascent stage so it's based on the understanding of

theories and various reports.

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 CHP 3: LITERATURE REVIEW

The banking system has experienced disruptive change constantly throughout

history. Comparatively ancient history gives us the word “credit” (from Latin
“credo”, meaning I believe) that became a recognizable “business” in
Renaissance Italy. Banking constantly re-invented itself with the central
banking and public funding innovations of the seventeenth century
(Netherlands and Britain), systems anchored on precious metals (Spanish
empire and subsequently the gold standard) and of course the waxing and
waning of great banking dynasties. Great crises were almost always the
catalyst of major banking reform and restructuring, perhaps as far back at the
Latin American crisis of 1825 and of course more recently in the Great
Financial Crisis of 2008/9.

Entering the 2020s, the banking sector is facing the formidable challenge of
responding to COVID- related changes to customer behavior and the adverse
impact of economic weakness. In parallel, there is the presence of a potential
new class of competitors with powerful networks and deep investment pockets
(the so-called big techs). This combination of factors will most likely drive
significant discontinuity in the banking sector.

Big tech technology capabilities can bring benefits in customer outcomes and
efficiency that can be put to good use for society — to serve inclusion,to fight
financial crime, to improve the cyber and operational resilience of our
financial system, to name a few. But they also raise new types of risks and
challenge the traditional “vertical” (sector- oriented) model of regulation and
supervision, which may no longer serve society’s best interest today.

The main question for banks is how to prepare for the possibility of a major
incursion of the big techs into their core markets, where this has not happened
already. It is possible that big techs choose not to engage in core banking
markets. Banks may therefore need to rewrite their past formula of success,
and transform the way they serve customers, interact with third-parties and
make the very fundamental strategic choices of whether they wish to compete

20
as a “network” business model or compete in specific businesses serving
others’ network.

3.1 EMERGENCE OF OPEN BANKING

For a long time it has seemed like nothing much has happened in the financial
world since the invention of the credit card. In a world where digitalisation is
constantly evolving, the banking sector has actually not changed much at all.
However, the market has seen increased movement in the past few years. The
term ‘Open Banking’ is now on everyone’s lips - and not without good reason.
In recent years, a new FinTech start-up has been founded on a daily basis and
innovation in the financial sector is at an all-time high. Is this all thanks to the
seemingly brand new concept of Open Banking?

Be careful, appearances are deceptive! The innovation we see today is actually

the result of many small achievements on the road to Open Banking. The story
from traditional banking to today’s Open Banking goes further than you might
imagine.

In fact, the first trial run of online banking dates back almost 40 years. Many
moons have passed since Deutsche Bundespost [German Federal Post Office]
conducted its first screen text experiment with five external computers. A few
participants were able to process their banking transactions via screen text -
though at a snail’s pace.

The economic crisis of 2007–2008 and the subsequent loss of trust in banks
confirmed that the financial sector was in urgent need of a makeover.

The EU adopted the proposal for the Payment Services Directive (PSD) in
2007 in a bid to increase competition and choice for consumers in the financial
services’ space. The directive obliged banks to give their customers more
information about the payment services they offered, and it also introduced a
new category of payment service providers other than banks, the so-called
'payment services'.

21
In 2015, the EU adopted a new directive on payment services (PSD2) to
improve the existing rules and create safer and more innovative payment
services. PSD2 became applicable on January 2018, although September 14th,
2019, was its final compliance deadline.

Meanwhile, the U.K.’s Competition and Markets Authority issued a report in

2016 in which it stated that small banks were finding it too hard to gain new
customers, as a handful of big banks controlled most of the market share. In
such an oligopolistic market, customers didn’t have much of a choice when
selecting a financial services provider, nor full control over how their data was
being managed.

The CMA ruled that something needed to be done in order to drive wider
competition, transparency, and innovation in the financial sector. And so Open
Banking –- the first enactment of PSD2 -– was born.

Open Banking and PSD2 are often used indistinctly, creating confusion
between both concepts. Basically, the former is the U.K. version of the latter,
which has a broader European scope. Other differences are that while the
introduction of Open Banking standards only applies to the nine largest banks
in the U.K., the rollout of PSD2 affects all payment account providers.

3.2 HOW DID OPEN BANKING COME ABOUT & HOW DOES IT
WORK?

The biggest problems with banks’ storage of your data relate to the efficiency
and security of sharing said data outside the vault. If you want to share your
bank activity with a third party (for instance to be qualified for a loan, or to
avail of an expense tracking service), you only have a handful of tools at your
disposal, and none of them are particularly efficient or secure. On the
higher-tech side of the spectrum, you could choose to share access to your
emails or SMSs so that the third party could retrace your financial activity
from the notification messages sent by your bank or asset manager. Another
efficient option would be to share your digital banking username and
password so that the third party could deploy a screenscraper bot to go through

22
your account and fetch every piece of information. Both options come with
privacy and security dangers.

Coming to the lower-tech side of the spectrum, we have the trusty PDF file
format in which many banks allow their customers to download their data.
There are major issues with this – what if her bank statement contained a
sensitive transaction like a visit to a sexual health clinic or hospital?

Probably the first provider of open banking services on a big scale was the US
company Yodlee (now part of Envestnet). Yodlee relied on screen scraping to
access their customers’ accounts. This means that Yodlee took customer’s
electronic banking credentials and used them to log into the customer’s bank
portal. Since then, screen scraping has fallen out of fashion as the main
technique for extracting information from banks. The main problem was that
bugs or breaks in the scraping algorithm were very difficult to detect until it
was reported by users. Another problem with screen scraping was that it was
very laborious. In order to build a scraper for a page, you would first need to
analyze and break down all the HTML on that page. There can often be a lot
of code to parse through until you find the tidbit you want.

As seen above, the current methods are expensive, time consuming,

inefficient, or laden with privacy risks. Open banking is the idea that banks
should offer application programming interfaces (APIs) that enable their
customers to more easily access the data that lies within the bank’s vault. This
consent could be provided via a secure banking page provided by the bank
within the third party’s application, or it could be provided by a special
consent collector entity trusted by the bank to verify the identity of the bank’s
customers. At its core, open banking underscores the notion that the financial
data of a customer belongs to the customer herself, not to the vendor that
provides a service to her. More and more people are coming into the formal
financial system, and in doing so, they are generating troves of financial data.
This is highly valuable information for the user; organizing this data
efficiently could really help the user do things like track her expenses or plan
her taxes. When shared with a service provider, this information could also
help the user get the most cheap, personalized, and timely financial services.

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 3.3 WHAT IS OPEN BANKING?

Open banking is the practice of enabling secure interoperability in the banking

industry by allowing third-party payment service and other financial service
providers to access banking transactions and other data from banks and
financial institutions. Third-party organizations are able to access the data
through the use of application programming interfaces, or APIs. As the global
economy continues to evolve, open banking is becoming more popular,
because it allows for faster, more secure transactions anywhere in the world
and it gives consumers more opportunities, through the use of third parties, to
manage their finances.

Open banking is enabled by a series of technologies, regulations, and services

that aim to allow developers to create new banking services, new banking
business models, and new commerce capabilities. New customer expectations
and technology-centric regulations are an important lubricant for open banking
to thrive. Three forces combine to make the open banking dream possible:
changes in banking regulation, changes in culture, and changes in technology.

For the consumer, open banking promises to provide more choices, better
service, and frictionless commerce. For example, you might want to use
Amazon, Paypal, and Facebook to send money or gifts securely to friends with
a simple click or swipe. No more logging in to your bank to enter payee details
or account numbers; just click “send $200 to Ruby,” and you’re done. Or,
instead of clicking, ask Siri, Alexa, or Cortana. A second example would be
when you want to use a third party financial planner who needs secure access
to your accounts. In open banking, that third party financial planner could
securely access all your spending habits with no hoops for you to jump
through to make that happen. Risk and compliance used to be portrayed as a
thankless and challenging job, replete with legal, technical, and cultural
complexity. New technology and tech-centric regulations provide a wind
beneath the wings of developers making banking systems more agile,
intelligent, and automated—and perhaps for the first time—cool. They even
have a cool new name: RegTech.

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Open Banking believes in democratizing access to banking data, and making it
available in real-time to customers so that they can manage their finances
better. Open Banking relies extensively on the use of Application
Programming Interfaces (API) to securely share customer data among banks,
as well as allow third party developers to access the bank’s technology
environment to build innovative applications and services. But above all, Open
Banking marks a significant shift in banking structures, as it forces monolithic,
universal banking institutions to make way for a collaborative ecosystem of
financial providers.

Unlike most business trends, which feed off consumer, technology or

competitive changes, Open Banking draws its momentum from regulation and
governmental drive. Examples include the Payment Services Directive 2
(PSD2) in Europe, the Open Banking Working Group in the United Kingdom,
the Unified Payments Interface (UPI) in India, and the Open Banking regime
in Australia.

Faced with a deadline to open up their customer data, banks around the world
are scrambling to get their act together. A big part of this process involves
transitioning from a pipeline model of business – where the bank creates,
owns, and distributes its products and services on its own – to a platform
model, where it acts as an aggregator of the best financial products and
services available in its market. In doing so, the bank is able to offer
customers, products and services that are in their best interest (not necessarily
from its own stable), to create maximum value for all concerned.

The following strategies can be used to benefit the customers from the new
ecosystem:

● Embed services in an application chosen by the customer

The most popular strategy is to use APIs to expose various banking
services that corporate and small business clients, or even third parties
such as FinTechs can pick, choose and structure as required. This
presents a challenge to the bank, which must now find a way to embed
its services in the users’ applications, form factors, and business
processes to enable them to add value to their customers. A number of

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 banks, including BBVA, Barclays, Citibank, and Deutsche Bank are
setting up API stores/ marketplaces and development centers for this
purpose.

● Join an established ecosystem

With tech giants emerging as a force to reckon with in the payments
space, it makes sense for banks to be part of an ecosystem led by
Apple Pay, Amazon Pay or PayPal. While this decision is voluntary,
banks may also be required by law to join other ecosystems, such as
the Unified Payments Interface in India.

● Take the lead in curating an ecosystem

Several banks have taken the initiative to build their own Open
Banking ecosystems. Recently, seven banks in Singapore came
together to create PayNow, a money transfer facility that only needs a
mobile number or National Registration Identity Card (NRIC) to work.
HSBC has its HSBC Connections Hub, a social network that business
customers can use to connect with other HSBC customers worldwide.
Last year, Deutsche Bank pioneered a digital platform for SME clients
where they could access benchmarking, business intelligence, credit
monitoring, and trade information tools. And in October 2016, ICICI
Bank and Emirates NBD, one of the largest banking groups in the
Middle East piloted a Blockchain-based network for international
remittances.

● Provide banking as a service

FinTech firms and startups are key actors in the banking ecosystem.
Actually, no platform strategy is complete without their participation.
This is why many banks are seeking to combine their strengths with
those of FinTech companies and neo banks to create a banking
offering. In this symbiotic arrangement, the younger partner relies on a
licensed bank for basic banking components, such as technology stack,
operations, network connections and compliance, all of which the latter
offers as a service, on top of which the FinTech firm builds new
customer experiences and value propositions.

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 3.4 WHAT CAN OPEN BANKING DO FOR CUSTOMERS?

Open banking efforts are a big deal for banks, regulators, and TPPs. And
consumers should eventually have more options for managing their money,
borrowing, and making payments.

● Pressure on Banks

While open banking allows TPPs to access bank information, banks

themselves might decide to improve the services they offer. Instead of letting
somebody else control the messages you receive, banks can compete with
improved PFM tools and transparent, competitive pricing.

● More Helpful Tools

Expect to see more third-party PFM tools. App developers will have an easier
job with open APIs, allowing them to help you take control of your spending.
With artificial intelligence, they may be able to predict events in your account
or suggest products that may save you money. Of course, some apps might not
recommend the best products and services—they might recommend the ones
that pay referral or affiliate fees instead—so you should choose your tools
wisely.

● Streamlined Lending

Getting or refinancing a loan may become easier. Instead of manually

gathering information from a variety of sources and submitting it to a potential
lender, consumers can permit lenders to just grab what they need directly and
make them a better offer.

● Business Loans

When your small company needs to get a loan or draw on a line of credit,
lenders may want to review your books. Again, instead of your submitting
reports that could be inaccurate by the time lenders see them, lenders can pull
all the data they need from your bank and accounting system.

● Automated Accounting

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Businesses and consumers may also benefit from easier and less expensive
accounting processes. Integrated systems can automatically update when you
send or receive payments, and you may enjoy a reduction in manual
tax-preparation tasks.

● New Payment Methods

Payments are a significant piece of European open banking regulation. Under

the European Commission's Second Payment Services Directive (PSD2),
banks must allow third-parties to initiate payments on your behalf. Again, this
isn’t necessarily new (Venmo and PayPal are both non-bank products that you
have probably used), but it will get easier for additional service providers to
handle payments. Businesses may also benefit through reduced payment
processing costs.

● Privacy Issues

Open banking relies on sharing data, but you might prefer to keep your
information private. Fortunately, open banking should not automatically
reduce security or privacy. TPPs and banks would need to take steps to protect
confidential information and to educate consumers about the new risks they
face.

● Data Sharing

Open banking initiatives typically specify when and how financial institutions
can share your data. For example, U.K. regulators require customers to
approve of information-sharing with specific parties. U.S. banks already
control (and limit) how your information is shared, with input from you, and
they don’t seem eager to give up that ability.

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 3.5 OPEN BANKING ECOSYSTEM

Technology Layer Enablers at Banks:

● Core Banking Platforms

Core Banking platforms handle the complete life cycle of customers across
liabilities and asset products. Many of these platforms are now getting API
ready. We believe that there is space in India for a completely API powered
Core Banking Platform which could propel a new segment for banks.

● API Gateway Players

An API gateway enables access of the bank’s APIs to partners in a secure way,
while handling user & partner authentication, routing, controls, API
monetization, as well as monitoring and analytics.As of now, there are a
limited set of international players in this segment and there is space for a
flexible Indian player to create an impact.

● API Integrators

These technology-focused startups help in the development of APIs on API

Gateways while handling the bank’s internal APIs. These niche players have
attained a level of expertise in banking services and are helping in making
banks agile.

● Networks

Payment networks in India provide payment railroads to everyone through

products like Debit Cards, UPI, Credit Cards, IMPS, etc. NPCI has played a
huge role in India through multiple innovations like IMPS, UPI and more.

Third-Party API Layer:

● API Stack Players

API Stack Players work with multiple banks and provide simplified access of
banks to Fintechs. They have become the first port of call for banking services

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like prepaid, collections, credit etc. Internationally, bigger players like Plaid
& Tink have emerged.

This segment is likely to see intense action in the next 3 – 5 years, with
multiple Unicorns coming into the picture as well. There is limited
competition in this space, and enough space for more than ten strong players
given the need and width of services.

● NBFC Account Aggregators

RBI has issued licenses to NBFC Account Aggregators who will help the
customers in getting a single view of their entire financial status as well as in
sharing (with their consent) this information through APIs for various
purposes like credit, wealth management etc. These NBFCs are still working
with banks and other financial institutions for aggregating the data and would
be able to create an impact in the next 6 to 18 months.

Customer Layer:

● Retail NeoBanks

India has recently seen the arrival of Retail Neobanks, which are focused on
the comprehensive needs of retail customers like savings, payments, lending &
wealth. While a lot of current large UPI-based platform players almost appear
like Retail Neobanks, many new players, with deep pockets, are still
attempting to enter this space. We believe that there would be cut-throat
competition in this segment, and that it is the most challenging segment to
win.

● SME NeoBanks

SME needs have always been different to those of the retail and corporate
segments. However, most banks have always treated SMEs as a part of them.
The real needs of SME customers, like invoicing, collections & credit have
never been catered to by banks. SME Neobanks have focused on the overall
needs of the SME customers and have built robust solutions for their identified

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segments. Bank Open has led the way, and many new fintechs like Ezo &
Instantpay are entering this segment. We believe that this segment is large
enough to allow for the coexistence of more than five valuable SME
Neobanks.

● Digital Banks

Digitally savvy banks like Kotak, SBI and DBS have taken an aggressive
approach to new age banking and have built their Retail Digital banks
(Kotak811, Yono and Digibank respectively) which are at par with Fintechs.
They have acquired a substantial customer base over the last couple of years
and are continuously improving their products & services. We believe that
these banks will have long term advantages and may impact potential
opportunities for Neobanks.

Many banks are building their own digital banks. However, due to the lack of
digital culture/technology, these initiatives have not moved at the right pace.
Many of these banks would take their Digital Bank to production this year to
reduce the impact of COVID-19 on them.

We expect at least a couple of Digital Banks to be built for MSMEs in the next
12 months, given the sheer monetary size of this opportunity.

● Big Techs

Amazon, Google and other big tech players have been at the forefront of
launching their UPI enabled platforms for payments. These players are
continuously progressing and are offering a slew of credit products. We
believe that these players would make a long-lasting impact on the Open
Banking Ecosystem with their tech prowess as well as a large customer base.
They may also buy out multiple Fintechs and API stack players.

Enabling Layer: Data Providers / India Stack:

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 ● KYC / AML / Risk Management Players / Credit Bureau

This is a critical layer for enabling Open Banking and is a standard layer used
by Banks, NBFCs, Fintechs, Neobanks etc. These players help in simplifying
customer onboarding and management through KYC checks / Fraud checks,
Credit checks, AML checks and regulatory reporting.

● India Stack

IndiaStack is a set of APIs that allows governments, businesses, startups and

developers to utilise a unique digital Infrastructure to solve India’s hard
problems towards presence-less, paperless, and cashless service delivery
(source – India Stack website). This stack has accelerated innovation in
financial services, and multiple countries have replicated this model.

We believe that there are multiple newer areas like credit, collections and more
where universal APIs would be required.

● Investors

Investors have nudged innovation along by investing across all layers. We

believe that COVID-19 will accelerate the growth of Open banking & Neo
Banking in India and potentially 40% of the overall investment will flow into
these segments.

3.6 OPEN BANKING & APIs

Companies aiming at digital transformation face obstacles that slow down

their innovation efforts! According to Connectivity Benchmark Report 2018,
the biggest problem is to integrate new applications into the existing IT
infrastructure. 89% of innovation managers believe that integration challenges
slow or prevent digital transformation. Currently, IT departments spend 63%
of their total time on running their existing business and dealing with
integration problems, rather than focusing on innovation and development.
The number of applications used by companies today is very high. According

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to the 2018 Connectivity Benchmark Report, an average organization uses
more than 1,000 unique applications. Of the more than 1000 unique
applications, only 29% speak to each other. Under these circumstances,
companies have to make point-to-point integration by making special
improvements for each of these applications to talk to each other. This means a
lot of cost and effort.According to the same report, the lack of re-use and the
lack of self-service bring a company large costs. Only one third of
organizations ‘internal IT software assets and components can be used for
developers’ reuse. In addition, more than 80% of organizations say they don’t
always reuse their assets when developing new products and services. There is
a develop-use-leave cycle.

The problems that apply to all of the companies mentioned above also apply to
the banking and financial services sector. Due to the high number of
employees and the presence of channels such as branches and ATMs, the
number of singular applications used is increasing. What does it need to
accelerate these large ships and increase their maneuverability? How can
banks solve this big innovation and cooperation problem?

In fact, the answer is very clear. Application Programming Interface; API with
abbreviated and more known form. And open banking regulations and
standardization shaped by APIs.

What this API is: It’s a way for two computer applications to talk to each other
over a network, using a common language they both understand.When you use
an application on your mobile phone, the application connects to the Internet
and sends data to a server. The server then retrieves that data, interprets it,
performs the necessary actions and sends it back to your phone. The
application then interprets that data and presents you with the information you
wanted in a readable way. This is what an API is - all of this happens via API.
To explain this better, let us take a familiar example.

Imagine you’re sitting at a table in a restaurant with a menu of choices to order

from. The kitchen is the part of the “system” that will prepare your order.
What is missing is the critical link to communicate your order to the kitchen
and deliver your food back to your table. That’s where the waiter or API

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comes in. The waiter is the messenger – or API – that takes your request or
order and tells the kitchen – the system – what to do. Then the waiter delivers
the response back to you; in this case, it is the food.

3.7 TOP INDIAN PRIVATE BANKS’ APIs ENABLING INNOVATIONS

IN OPEN BANKING

The Payment Services Directive 2 (PSD2) regulation in Europe and the Open
Banking one in the United Kingdom (UK) have mandated banks to share data
with third party providers (TPPs). Banks share customer data through
application programming interfaces (APIs) with relevant third party providers
(TPPs) after the consent of the customer. This ensures the customisation of
financial products where customers are able to view different financial
accounts, spends, advice on financial requirements, etc., on a platform.
Mexico is another example of a regulatory-driven approach to open banking.
Generally in Asian countries, market forces drive open banking that is usually
not completely regulated by the government.

Open banking in India has made its presence through Unified Payments
Interface (UPI), a system that powers multiple bank accounts into a single
mobile application (of any participating bank), merging several banking
features, seamless fund routing and merchant payments into one hood.
FinTechs are partnering with banks to access data to offer competitive
customised financial services. This is usually not possible with legacy systems
of traditional institutions. However, they are sitting on huge amounts of
valuable data. Banks have turned to technologies such as artificial intelligence,
machine learning, IoT, and blockchain to stay relevant in the industry.

APIs function in a machine-to-machine communicative way where different

software applications exchange data directly. Below is the list of the top
private banks in India who have opened up their APIs to FinTechs in order to
offer better services to the consumer.

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Kotak

Kotak Mahindra Bank announced the launch of its open banking platform in
November 2018. The platform is powered by a developer portal which makes
Kotak’s APIs available to FinTechs and developers, thereby creating a
collaborative ecosystem. With this, customers benefit from better financial
services which are catered to their specific needs.

The platform offers Kotak’s APIs for lending and payment products. The lead
generation APIs for the bank’s various lending offerings are exposed and
using these, new loan applications are initiated in Kotak’s lead management
system. With digital payments driving towards interoperable, real-time, mobile
solutions, the bank has simplified the management of payment flows so that
partners can focus on their core business without the hassle of software and
hardware integrations.

FinTechs and developers have to register their details on the portal before
gaining access to the APIs. The initiative has been a part of Kotak’s
digital-first organic growth strategy that was planned to be driven by its
ABCD charter that focuses on the AI enriched app, biometric enabled branch,
context enhanced customer experience and data empowered design.

YES BANK

The bank had launched the YES Fintech Developer portal in November 2019.
The API sandbox consists of over 50 virtual APIs and is in line with the
bank’s strategy of keeping customers at the core while ideating and
co-creating solutions. The sandbox builds on the bank’s strategy of using API
banking as an enabler to customise digital solutions for its clients. This helps
corporates, MSMEs and startups to identify ‘best-fit’ APIs based on their
sectors and also allows them to test the APIs with their app in a secure
environment. The sandbox enables clients across sectors to visualise multiple
banking use cases customised for their application and understand possible
integrations and functionalities of the bank’s APIs.

YES Fintech Developer provides a boost to the bank’s effort of co-creating

innovations with FinTechs, startups and the developer ecosystem to enhance

35
the customer experience. Developers can complete integrations in the
environment and mimic how their solutions would work in a ‘live’
environment. Once they are comfortable, they can move to subscribe to the
APIs.

Through the sandbox, YES BANK will grant access to APIs across 4 usage
categories including account management, payments, cards and CRM.

HDFC

The HDFC Bank Public API Portal has 142 APIs as of now in its catalog. The
bank aims to securely expose APIs to developers while providing them with
all the tools and resources they need in order to quickly build apps. In
December 2019, the 1st edition of the HDFC Bank API Banking Summit was
held to apprise on the delivery of HDFC Bank’s internal services via the API
gateway to external partners such as corporates, FinTechs, aggregators and
start-ups.

Ready to consume partner APIs for different domains such as payments,

customer sourcing and servicing, among others are available. TPPs have to
add an application to get an API key. The portal assigns each registered
application a unique key as applications need a key to access and test APIs in
the API Explorer. To monitor the usage and latency of the APIs, the portal’s
Real-Time Analytics can be utilised.

An example is the ‘Aadhaar Vault – Reference Key’ API where the calling
application can fetch the reference key associated with an Aadhaar number
registered in HDFC’s Aadhaar Vault. Aadhaar is a verifiable 12-digit
identification number issued by the Unique Identification Authority of India
(UIDAI) to residents.

ICICI

ICICI Bank announced the launch of its API Banking portal in January. The
API Developer Portal enables partner companies to co-create customer
solutions in a frictionless manner and in a fraction of the time usually taken for
such integration, thereby significantly increasing productivity. The ‘ICICI

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Bank API Banking portal’ consists of 250 APIs enabling businesses, fintechs,
corporates and e-commerce start-ups to partner with the bank.

The APIs are a set of instructions, which allow the third party applications to
communicate with the bank’s various technology applications and collaborate
to bring in new customer propositions. They are available across an array of
categories including payments and collections such as IMPS, UPI payment/
collection, accounts & deposits and cards & loans.

3.8 THE GROWING IMPORTANCE OF APIs IN BANKING

It’s no secret that the last decade has been one of the most transformative
periods for the global banking industry, at least from a regulatory perspective.
Financial institutions have been forced to evolve under this new era of
transparency, with authorities taking unprecedented steps to ensure that
consumer protection is maintained in the face of all of the business activity
being conducted by banks. Among the most comprehensive transparency
drives is Open Banking, which requires big banks to share their customer data
with third parties. And at the heart of Open Banking lie application
programming interfaces (APIs).

APIs traditionally refer to technical interfaces for software programmes.

Today, they have become increasingly sophisticated, representing integral
components of the Internet of Things (IoT), whereby smart devices utilise
APIs to deliver solutions to customers. For example, a smartphone might be
used to pay for an item in a shop, with the device then sending data via an API
call to update the customer’s bank-account balance after payment. As such,
APIs make communication between relevant parties more convenient and
efficient, among their many advantages. And today, they are being used to
change the face of global banking.

In a banking context, this interfacing enables a third-party application to

access a bank’s common tools, services and valuable assets, such as financial
information, customer accounts and product catalogues. In doing so, APIs
make it quick, convenient and cost-effective for the bank and the third party to
connect. And by facilitating access to valuable shared customer data,

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customers can have a potentially better overall experience when conducting
their financial affairs. For instance, an API could analyse customer-transaction
data to ascertain which available financial offerings are most suitable to that
particular customer, such as a lower-interest credit card, specific loan product
or higher-interest savings account.

APIs have become especially important to banks during the last couple of
years, ever since the Revised Payment Service Directive (PSD2) came into
effect across Europe in January 2018. This directive has expedited the
development of APIs so that third parties such as fintech
(financial-technology) companies and online financial-services vendors are
developing apps and services that can most benefit from the data they can now
procure from financial institutions.

Three main types of APIs are being deployed by banks at present:

● Private API: This API is accessible only within the financial

institution and is therefore used to improve internal processes, such as
boosting operational efficiency.
● Partner API: A more open API that can be accessed by the bank’s
preferred third-party partners. As such, partner APIs can facilitate
greater expansion through new channels than a private API. Such
partners could include clearinghouses, brokerages and custodian banks,
and they can provide services to their customers using the bank’s
platform.
● Open/public APIs: Not as commonly used at this stage, this API
involves making business data available to third parties. Banks can
deploy such APIs to generate additional business and grow their
customer bases. For example, the bank could enable an API for a
loan-comparison app, which would allow it potentially to acquire new
business from customers shopping for new loans.

As such, banking APIs—especially open APIs—are now playing a crucial role

in helping lenders transition from traditional banking to open banking,

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allowing third parties to utilise banks’ services or indeed offer the same
services to their own customers. They also enable businesses to more
seamlessly connect with their consumers than was previously possible, which
in turn should improve the customer experience. A digital wallet, for instance,
helps to provide payment services. Or the customer could use GPS (Global
Positioning System) tracking with the bank’s API to locate the nearest branch
or automated teller machine. Customer-specific APIs are also being created
with the appropriate levels of security to provide customers with their own
individually tailored banking information—such as account alerts, bill
payments and fund-transfer services—allowing them ultimately to gain better
control of their finances.

As is often the case these days, data analytics lies at the heart of the banking
API revolution. Banks can now collect substantial quantities of data relating to
customer behaviour, which should, in turn, enable them to create more tailored
marketing initiatives. Through using networked accounts, for instance, banks
can gain a more realistic picture of customers’ financial situations, which in
turn should inform them more accurately of the types of lending products that
would be most suitable for them. Customers can also now indicate their
banking preferences directly to their bank, indicating exactly which offerings
they do and do not like. As an example, the Canadian digital bank Tangerine
partnered with IBM to develop its mobile-banking app, which provides an
opt-in “shake to feedback” feature. “It offers customers an immediately
accessible way to provide personalized feedback directly to the bank,”
according to IBM. “This capability gives personal attention to the banking
consumers who may not believe they are heard when they post in a generic
app store comments area.” Importantly, IBM notes, Tangerine “gains insight
on any patterns for app defects and design improvement ideas straight from
their customers”.

Third parties can also leverage banks’ financial information to build

applications that facilitate a connected network of financial institutions and
third parties. But while this should prove beneficial in most instances, it also
means that a large network of parties could be impacted adversely should the

39
bank fail to perform. India’s Yes Bank provides an apt example of this
problem. After being placed under moratorium in March by the Reserve Bank
of India (RBI), the troubled lender caused service disruptions to
payment-services providers and other partners of the bank that were using its
APIs as well as its B2B (business-to-business) API service. Speaking to Indian
start-up publication Inc42, the chief executive officer of payments firm
Razorpay noted that “Yes Bank has one of the best API networks in the
country which explains the large dependence of ecosystem players on the
bank. While our services have not been directly impacted, the broader
ecosystem will be hit due to the interconnectedness of the participants”.

Nonetheless, APIs are now having an increasingly significant impact on the

global banking system, and things look set to only grow further from here.
This seems especially likely given the encouragement that Open Banking has
received from not only the banking industry but also from regulators and
government entities. Indeed, through PSD2, there is now a regulatory
incentive for banks to adopt APIs sooner rather than later.

Initiatives such as the Open Bank Project, founded by Berlin-based software

company TESOBE, are certainly expediting this adoption rate. The Project,
which has already worked with more than 40 bank customers around the
world, enables banks to offer an ecosystem of third-party apps and services to
their customers. “We provide banks with an open API (for partners and 3rd
party developers), an app store (through which end-customers discover the
Apps made available by the bank) and a strong community of 3rd party
developers already familiar with the API,” the Project explains.

By enabling financial institutions to connect with businesses and consumers,

to transfer information securely and conveniently, and to boost the scope of
products and services they can offer to a potentially wider customer base,
APIs could ultimately have a profound transformative effect on the future of
banking.

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 3.9 THE RISE OF NEO BANKS

The Neo Banks are virtual banks that are operated online. A bank that's
completely digital instead of being physical. Neo banking provides a complete
experience of digital banking through mobile applications.

Neo banks offer solutions in ways that conventional banks do not, with the key
objective of providing a smooth customer experience. They are cheaper,
quicker, and can leverage a single network with the entire financial portfolio.
It's no secret that conventional banks are at the frontline of increasing rivalry
from many digital world areas. Neo banks are expanding exponentially,
leveraging state-of-the-art technologies to win over consumers who expect
financial services that are easier, quicker, and more efficient. Neo-banks have
been the next big thing in fintech in recent years.

Neo banks have the following five segments:

● They run on targeted customer segments that are not the concerns of
legacy banks, such as SMEs, tech-savvy millennials, and low-wage
classes.

● Higher running expenses and expenditures in the capital when there are
no actual divisions.

● Higher fees/charges and fast retention of customers.

● Built with technologies from the cloud.

● Specialised financial systems, such as payments, expenditures,

receivables, and control of expenses.

● Neo banks also focus on forex cards, credit cards, cash processing, cost
management, corporate banking services, and loan products globally.

The customer service of Neo Banks depends on a mix of chatbots and AI to

provide flexible, automated, online support. In contrast, conventional banks
rely on customer support in person or by telephone. Since neo banks are fully
digital, a customer opens up a large window of benefits.

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Reasons why neo banks are the need of the hour:

● Hassle-free banking services

In a conventional bank, everybody understands and has been through the pain
of opening an account. Of course, this approach has become more
straightforward, but still, the rigidity is not gone. Creating an account with
new banks eliminates this tediousness.
Neo bank, as mentioned, is a fully digital bank, removing the likelihood of a
storefront. So, without going anywhere, users can create an account. Neo bank
is entirely mobile-friendly, making this process simple, and the account is
ready in a very short period.

● Soothing user interface

Neo Banking is all about customer experience, as mentioned above. This

customer-oriented banking facility offers an interface that is highly
user-friendly and easy to understand and run. Neo banking apps are
responsive, crisp, and consumers need them to be well crafted.

● Innovation-first attitude

Traditional banking has to follow a creative mentality instead of merely

keeping track of the ever-evolving modern landscape. The industry will
expand immensely by prioritising innovative technologies, from educating
senior executives to hiring digital-first experts.

● Advanced security level

When it comes to digital purchases, security is and always will be the most
worrying aspect. 2FA (2-factor authorisation), biometric authentication,
RBAC (Role-Based Access Control), encryption technologies, and other
security measures to secure consumer data, are introduced by the Neo bank
program.

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 ● Supporting Clients

Neo banks provide their clients with round-the-clock customer service by

leveraging chatbots and robo-advisors that provide automated advice based on
their purchase history. Artificial Intelligence (AI) based algorithms allow
neo-banks to unobtrusively tap emerging consumer demands and deliver
personalised solutions that better suit their needs.

Neo banks offer financial services including:

● Opening accounts
● Payment and money transfer
● Loans
● Other services, including budgeting, etc

Along with the explosion of mobile technology and financial inclusion, there
is a massive drift in the financial industry. Indian customers are embracing
digital means moving away from physical cash.The number of digital
solutions is increasing rapidly as customers are making themselves
comfortable transacting digitally. The integration of technology and banking
services has changed the banking industry making transactions more
customer-oriented.

At the same time, chatbots and AI are making it possible to analyze customer
patterns, credit history, and other data to create realistic data models for
recommending financial services based on their lifestyle choices.In a way,
Neobanks are providing a fluidity that traditional banks can’t. It is just
convenient and easy to operate a mobile application that is managing their
money and helping them with various decisions.

How does a Neo bank work?

Neo banks are very different from traditional banks in every aspect and their
business model is not an exception. A business model on which a neo bank
works is altogether different from a traditional bank model.

43
As aforementioned, neo banks are customer-oriented and provide personalized
or more customized services. As they are fully digital, technology plays a vital
role in the working model. Neo banks mostly work on the decision-making
model which is driven by data-based decisions.They collect and analyze data,
understand the patterns, try to calculate how their customers behave, and then
create predictions/results.

How does a Neo bank differ from a traditional bank?

Fundamentally, neo banks are different from traditional banks in every aspect
from business models to customer care. Here are some points for Neobank vs.
traditional bank:

As aforementioned, traditional banks have a physical banking service platform

and branches, whereas, neo banks are fully digital mobile applications (with
no branches). Traditional banks need additional overhead costs (ongoing costs
on rents, electricity, etc) which they collect from customers in the form of
services like a bank statement, bank alerts, etc.

Whereas neo banks have few costs and they are transparent. Neo banks have
either no, partial, or full banking license, where for traditional banks a full
banking license is a must.

Any approval process (opening account, etc) is lengthy in case of the

traditional bank as it is fully manual. Neo banks make this tedious task
automatic and quick.

Neo banks’ customer support relies on a combination of chatbots and AI

providing flexible, virtual, online support whereas traditional banks rely on
in-person or telephone for customer support.

What are the Advantages of Neo banking?

Since neo banks are completely digital, they open up a wide window of
advantages to a customer. Here are some key advantages:

● Hassle-free account creation

44
Everyone knows and has gone through the pain that is creating an account in a
traditional bank. Sure, this process had become more simplified, but still, the
rigidness is not completely gone. Creating an account with neo banks removes
this tediousness completely.

As mentioned, neo bank is a completely digital bank, thus eliminating the

possibility of a storefront. So, users can create an account without going
anywhere. Neo bank functions fully on mobile, making this process
comfortable and the account gets ready in a very short amount of time.

● Seamless international payments

With traditional banks, there is always this line differentiating how we transact
nationally and internationally. We may need to upgrade the current debit/credit
card or get altogether a new card to transact internationally.

Neo banks overcome this disadvantage and allow transacting nationally and
internationally with current exchange rates.

● User-friendly interface

As mentioned above, neo banking is all about customer experience. This

customer-oriented banking facility provides an extremely user-friendly
interface that is easy to understand and operate. Neo banking apps are
responsive, crisp, and are well designed according to the need of customers.

● Service Speed

Neo bank transactions are real-time and immediate. It provides you a

dashboard with an overview of every transaction and up to date balance. It
also helps you manage your finances, expenses, and savings and can be
customized according to your requirements.

● Lower Fees

One of the disadvantages of the traditional bank is its high operating cost
which often comes in the form of charge for services like account statements,
transaction alerts, etc.

45
Sometimes, customers end up paying more for charges. Neo banking
eliminates this. It operates digitally and makes a wide range of services
available for customers with just a few clicks.

There is no physical infrastructure, maintenance for physical branches, and

ATMs in the case of Neo bank, which saves additional charges. Neo banks
offer their basic services free of cost.

Skipping on all the extra service charges, neo banks make themselves a great
and promising alternative.

● Value-Added Services

Banking is not only about payment transfer anymore. Neo banks use account
information, customer data, patterns, etc. with AI and recommend other
financial services for customers as per their needs.

Neo banking application backs up its recommendation with the statistics and
insights displayed on the interface.

Neo banks leverage customer profits, recommend services based on

demographics, and make it easy for customers to make their own investment
decisions.

● Advanced Security Features

Security is and always will be the most concerning factor when it comes to
digital transactions. Neo bank application implements 2FA (2-factor
authorization), Biometric verification, RBAC (Role-Based Access Control),
encryption technology along with other security measures to protect customer
data.

The applications are built to ensure compliance with anti-money laundering

laws, complete privacy of customers, and to prevent malware attacks.

In India, Neo banks are already on the rise and they are disrupting traditional
banking models. Becoming the future of banking, their popularity has
increased in a relatively short span of time.

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 3.10 4 TOP NEOBANKS IN INDIA INNOVATING IN THE BANKING
SPACE

The COVID-19 pandemic has accelerated digital acceptance among customers

for their banking requirements as they are wary of visiting bank branches with
social distancing being the current norm. Neobanks, also called smartbanks
and challenger banks, are digital-only banks with no physical bank branches.
These banks have been presenting an alternative banking option to other
traditional financial institution incumbents.

Neobanks do not face impediments such as legacy technology and outdated

processes which are generally the challenges of financial institutions. These
smartbanks are here to save the day from bloated incumbents who may have
taken their customers for granted for way too long. Below are some of the top
digital-only banks in India for individuals as well as businesses that are here to
stay and transform the banking space.

● InstantPay

InstantPay delivers full stack banking services to individuals and businesses of

all sizes. The bank is said to process a million of transactions daily. With
personal, business and inclusive banking solutions, InstantPay offers instant
activation, money tracking and cash deposit features. The neobank has
provisions of round the clock customer support, 365 days a year.

InstantPay can be used on the web and mobile. Businesses can integrate
InstantPay’s API with their business applications or accounting systems. Its
API banking platform is a super scalable cloud platform that auto-scales from
zero to a million transactions in a single day. Businesses can play around and
safely validate code with a sandbox mode before hitting the production
environment.

This challenger bank’s Indian banking partners are ICICI Bank, Axis Bank,
IndusInd Bank and Yes Bank. Individuals can open a digital account with
InstantPay which is a good alternative to wallets and traditional bank accounts.

47
Startups and SME businesses can open a Smart Bank Account. Large
enterprises can avail scalable and cost-effective solutions offered by
InstantPay. The InstantPay Digi Kendra service offers basic banking,
insurance, and travel booking facilities, among others.

● Niyo

Since its inception in 2015, Niyo caters to the needs of over a million
customers across blue-collared sectors and to Indians that travel globally. At
conception, the neobank targeted salaried employees and created solutions to
help them get the most out of their salaries. Presently, Niyo helps users spend
smartly and safely overseas.

Users can pay bills, transfer funds, make online purchases, access ATMs
anywhere in the world, and track their spending habits, among others, which is
supported by the bank’s digital platform. With a team strength of over 800, the
Niyo team comprises of bankers, young technocrats, and individuals that bring
in deep domain expertise.

The Niyo IDFC First bank is an account, an app and a card. The bank offers a
host of features like interest rate provided on a savings account, zero per cent
commission on mutual funds investments and zero per cent on forex.

In May, the neobank announced its ‘Niyo Pathshala’ initiative for India’s
labour force to provide financial literacy. As part of the digital initiative, the
company is educating individuals on the benefits and features of branchless
banking.

● Open

Bengaluru-based Open began its FinTech journey in May 2017. Open is a

neobank that offers small businesses and startups an online bank account and a
credit card that combines banking, payments and accounting in a single place.
As a neobank for businesses, Open solves the pain points business owners go
through with the current banking system.

By signing up on Open, businesses can get an online bank account plus a

business credit card and a bank account to start collecting payments within

48
two minutes. This account enables SMEs to start collecting payments instantly
without any limit on the collection. Invoices can be generated and payment
links to customers can be sent.

Open’s payment gateway API can be integrated with the website of businesses
where customers can pay during the checkout process. E-commerce platforms
can integrate Open’s plugins to their websites for payment collection.

In June 2019, the neobank raised $30 million in its Series B round from Tiger
Global, Tanglin Venture Partners, 3one4 Capital, Speedinvest & AngelList
Syndicate.

● RazorpayX

RazorpayX is the neobanking platform of India’s newest unicorn Razorpay.

The neobank has served over 10,000 businesses – processing their payroll
through Opfin, paying for expenses through with RazorpayX, e-commerce
businesses can make instant refunds to credit cards, bank accounts and UPI
ID. Also, businesses can automate the refund process by creating refund
requests through API or the Dashboard.

RazorpayX automates refunds of Cash on Delivery (CoD) orders with Payout

Links. Payout Links helps automate the entire process of making a refund to a
customer within minutes.gh Corporate Card, and paying the vendors of
businesses in real-time, disbursing billions of dollars through the underlying
payouts layer.

Fully-functional current accounts on RazorpayX can be opened by customers

and operated. RazorpayX Current Accounts come with standard banking
features such as cheque book, debit card, and account statements. The
platform has capabilities such as API banking, approvals workflow, and
insightful reports.

3.11 OPEN BANKING : WHO WILL REALLY GET BENEFITTED?

Banking, as a domain, has always been a competitive one. To keep up with the
pace of the dynamic nature of this sector, banks & financial institutions are
gradually making the shift to experiment with newer technologies, like Open

49
Banking and innovative concepts like FinTech, designed specifically for the
banking sector. The basic idea behind all these innovations remain to offer a
better experience to consumers and leverage the choice of integrated systems
that are widely available today.

The impact of technology in making our lives better and smoother can’t be
overemphasized enough. FinTech (an excellent combination of finance and
technology!) is one such area making the traditional banking system seem
redundant with each passing day. The rise of Fintech sector has been
exponential in the last few years with Fintech adoption seeing a sharp rise
globally from 16% in 2015 to 33% in 2017 on an average.
Open Banking API (Exclusively covered as Open Banking API: A Journey,
1st part of this series of 3) is the newest offering of FinTechthat holds
immense potential to bring about a transformational banking experience to its
end users.

However, before making the switch to Open Banking, it is essential to

understand what the concept is trying to achieve and who will it really benefit?

The benefits of an Open Banking model aren’t just limited to consumers but
extend to service providers as well. It benefits, one and all, associated with it.

Benefitting Consumers

Among the many benefits of Open Banking to consumers, the most important
include: Giving the Benefit of Choice to Customers.

As a service provider, banks generally offer limited options and the same
services to all their customers.

Open banking, on the other hand, gives the benefit of choice to customers as
they now have the freedom to select from multiple service providers available.
It also empowers customers to take charge of their finances and make
informed decisions to manage their accounts.

● Easing Payments with Smart Devices:

50
With Open Banking APIs, customers won’t have to wait in long queues to
make purchases using physical wallets at stores. The concept will allow
emerging technology applications such as Google Pay, Samsung Pay, Apple
Pay, PayTM etc. to make payments using digital wallets using your
Smartphone or smartwatch.

● Ease of Remittance and Currency Exchange:

Increased number of migrants across the globe for better economic

opportunities means an increased amount of money to be sent back to their
families. Banks have always found international money transfer and
remittances to be a painful and expensive process.Instead of paying a large
transfer fee to the ‘money transfer businesses’ or facing the lack of proper
setup, especially in rural areas, FinTech companies like NDASENDA, have
made this entire process extremely simple, smooth, less expensive, and much
faster. Thanks to Open API, the money can be transferred, services can be
bought and bills can be paid seamlessly by using one single mobile App at the
comfort of your home.
Various service providers such as We Swap, World Remit, mPesa etc. are
offering ‘currency exchange services’, by using Open Banking, in a very
secure and seamless way to transfer even minuscule amounts of money
overseas.

● Customized Product Offerings:

Open banking holds the potential to offer customized and relevant product &
service options to the consumers which most banking apps fail to do. Open
banking APIs introduce the concept of service personalization in banking to
benefit customers immensely.

● Customers can now have access to multiple accounts in one place.

● The customers will be able to enjoy the best deals available with
greater transparency.

● An opportunity is here to see your current financial position in a single

application on your Smartphone. It is just a matter of ‘single click’.

51
 ● All the financial data at one place gives the consumer the leverage to
take quick credit decisions and avail the best deals possible.

● Open to better offers by credit providers and instant credit and

remittance of the same.

● With all the accounts linked together by an app and available on a

single platform, the consumer is ‘all-powerful’ to make a choice in
how to pay. This will also bring in some innovative offers by the banks
and the financial institutions to make new customers and retain the old
ones. It’s raining Profits!

Benefitting Banks and Financial Institutions

● Collaborative Advantage:

Open Banking gives an opportunity for banks to stay ahead of the competition
by letting them explore data-sharing agreements with fintech and other
non-financial service institutions.

● Allows Banks to Be Futuristic:

The model allows banks to be futuristic by letting them understand both data
privacy mandates that exist as well as the likely changes they need to adapt for
a better customer experience. Thus making decision-making foresighted and
insightful.

● Improves Customer engagement:

Open Banking APIs aids banks in enhancing their appeal as an entity thereby
enabling them to fulfill the constantly changing demands of both existing as
well as prospective customers.

Being ‘Customer Centric’ is the key. With Banks and Fintech merger, by using
Open Source technology, together they can offer customers a holistic service
or product, which will increase the customer satisfaction, loyalty, and
certainly, revenue.

Benefitting Fintech:

52
Among the ways Open Banking can specifically benefit fintech sector include:

● An Opportunity to Fulfill Customer Expectations:

The Open Banking offers an excellent opportunity to fintech organizations to

meet the consumers’ requirements for new and better services such as personal
finance management, account comparison, and access to credit services
through a single application.

● Banks Extending Their Services Using Fintech

With growing competition in the banking sector, most banks are looking to
leverage FinTech for their benefit.

Open Banking offers them the opportunity to extend their services offering for
better customer engagement as well as retention.

3.12 OPEN BANKING STANDARD IN THE INDIAN CONTEXT

Understanding the Open Banking standard:

Until now, the names of large banks like SBI, ICICI and PNB were considered
synonymous with custodian of customer’s financial data. Generally, these
traditional banks store customer’s financial information for their own use and
cite various reasons for not sharing the same with their competing banks or
other service providers, with “privacy concerns” being the most dominant one.
However, the rationale behind taking such a stance is simple: why should the
banks share all these invaluable insights when they had to invest a huge
amount of resources to obtain it?

The answer to the above question lies primarily in the first-ever UK initiative
launched in 2015 by the Open Banking Working Group (OBWG). The
initiative was aimed at exploring the ways in which free access to customer’s
financial data can be used to benefit not only the customers but also the banks
who, until now, acted as a depository of financial information. The efforts of
the OBWG culminated into European Union’s (EU) Revised Payment
Services Directive (PSD2) which came into force in January 2016. The PSD2

53
requires all the banks in the EU to disclose performance and fee data, thereby
providing customers with an option to compare their facilities and ensure
customer satisfaction in the new age of banking services through technology.
It also requires the banks to permit their customers to share their financial data
with other providers, hence leading to an “open banking” era.

As the term itself suggests, open banking is a co-operation model where the
banking information of customers, for instance account and transaction details,
borrowing or lending frequency, borrower’s health vitals, etc., are shared with
third-party companies providing financial services. The bank financial data of
customers are made ‘open’ to unaffiliated financial companies like fintech
firms and aggregators, only with the prior consent of such customers. This is
done with the wider objective of enhancing the capability of the finance and
banking sector by devising innovative customer friendly products, software
and services.

The sharing of the data takes place through open application programming
interfaces (APIs) established by banks, which can be understood to mean the
communication protocols and tools for building brand new products or
softwares. These APIs ensure interoperability of softwares of different
companies – they grant the software or applications of fintech firms or
financial service providers access to the financial data stored in the core
banking softwares of banks, thereby helping such providers in carrying out
specific functions related to the banking data and creating customized products
and services. Further, even banks do not have anything to lose by exposing
their core infrastructure for other’s use as partnering with fintech firms offers
them access to new and untapped customer segments (like students, migrants
and small shop-owners) as well as improvement of their own banking
operations hence, resulting in cost reduction. Such collaborations also save
these traditional banks from the trouble of developing mobile app,
maintenance, support and customer services as they work in the background as
a facilitator while the front-end is held by fintech firms with their
customer-friendly services focusing on customer engagement and interaction.

Open Banking the Indian way:

54
India stands out from the rest of the world when it comes to the
implementation of open banking framework in the country. While PSD2 is
only about payments, the concept of open banking was endorsed and adopted
by Indian regulators and market participants in two separate stages: one in
relation to payments and the other with respect to sharing of financial data.
The former is implemented through the Indian Government’s unified
payments interface (UPI) which has largely been successful so far and the
latter is managed by non-banking financial company – account aggregators
(NBFC-AA) as notified by a 2016 master direction issued by the Reserve
Bank of India’s (RBI) Department of Non-Banking Regulation and is yet to be
implemented by major banks.

UPI is an instant real-time payment system which allow users to perform

inter-bank money transfers and pay retail merchants directly from one’s bank
account through innovative mobile applications like Google Pay, PhonePe,
Paytm and BHIM. These applications are operating through API for banking
services (UPI API) launched by around 150 banks in the country (also called
“UPI Enabled Banks”), thereby changing the conventional way of retail
banking. By contrast, an NBFC-AA acts as a facilitating or interoperability
link between a bank, i.e., financial-information provider (FIP), and a fintech
firm, i.e., financial-information user (FIU). It is an RBI licensed entity which
provides the service of retrieving or collecting the financial information of an
individual from FIPs and consolidating, organizing and presenting such
information to FIUs. Generally, the FIU will use the data received from
NBFC-AAs to offer unconventional financial services and products dealing
with online lending, robo-banking, etc. However, despite such clear RBI
directions, most of the banks (except a few like Yes Bank and Ratnakar Bank
Ltd.) are reluctant to open up to the idea of NBFC-AA. Be that as it may, the
full adoption of NBFC-AA infrastructure presents an exceptional opportunity
to fintech firms, banks and other financial entities to innovate and transform
core services.

55
But what about Data Privacy?

With such smooth flow of financial data between different enterprises, one is
bound to question the measures that the banks are adopting to ensure data
privacy and security. Therefore, ‘customer consent’ has been made the
bedrock principle for an open banking framework. To simplify, since data
ownership is the reason that led to the advent of an open banking standard,
strict privacy laws requiring prior customer consent has been made a
pre-condition before sharing customer’s data with external parties. For
example, the European regulators under the PSD2 Directives require
two-factor authentication for all electronic payments. Similarly, in India, the
Ministry of Electronics and IT (MeitY) is conscious of the necessity ‘to
protect the autonomy of individuals in relation with their personal data’. Ergo,
just like the EU General Data Protection Regulation (GDPR), the proposed
Indian Personal Data Protection Bill, 2018 by MeitY qualifies ‘financial data’
as one of the categories of ‘sensitive personal data’which requires ‘explicit
consent’ of the subject before the data is processed by any entity. On similar
lines, the 2016 RBI master direction also mandates NBFC-AA to obtain
‘explicit consent’ of its customers before transferring his data to any FIU. One
cannot over-emphasize the fact that banks are only the custodian of customer’s
data, not the owners.

Furthermore, to ensure secure transmission, the financial data shared through

APIs with third parties are anonymized, hence revealing only generic statistics
containing no personal information of customers.

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 CHP 4: DATA INTERPRETATION

The following data is based on the awareness and perceptions about Open
Banking.the age group involved for the survey was between 20-30 years of
age. This particular age group is well versed with the banking & financial
system and its working. The survey also stated that the majority of people are
ready to be part of the Open Banking ecosystem given that they are given
financial literacy but also on the other hand people showed more faith and
trustworthiness for traditional banking system.

● The first statement states that whether people know about open
banking.

Response No of respondents

Yes 11

No 28

Maybe 11

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The survey reveals that 22% of the total respondents are aware about the
concept and 56% of them are unaware about the concept whereas rest 22% of
the total respondents have unclear picture of open banking. The reason behind
this can be,our current banking domain being operating traditionally. But the
ones who are connected which bank and its services are aware about the
concept.

● Second statement states how do customers look Open Banking as?

Response No of respondents

Disruptive technology 17

Innovative competition 11

Convenient 8

Market complexity 14

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 ● Third statement states whether India is matured enough for Open
banking

Response No of respondents

Yes 29

No 17

Maybe 4

The survey reveals that majority of people think that India is matured enough
for open banking. The Indian fintech sector is one of the most exciting digital
financial ecosystems worldwide .From the country’s bold payments
digitalization policy to its Unified Payments Interface (UPI) – the drivers of
this innovation are numerous. And the growth of fintech is, in turn,
transforming the financial landscape and its customers. New mobile wallets,
P2P payments, credit services, and money management apps are bringing
better, more valuable services to consumers. In parallel, this has also raised
open banking and open API solutions higher up the agenda for India’s
financial services ecosystem. The reason people don’t think it’s matured
enough because people still believe in traditional banking system as they are
more comfortable with one to one and not technology.

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 ● Fourth statement suggests whether client expectations are changing
with rapid changing products & services of the banks

Response No of respondents

Yes 31

No 5

Maybe 14

The survey that 62% of the people always expects different variety of products
& services from the banks as technology changes. Whereas 10% of them are
happy with old products & services as long as they suffice their needs. Until
recently, the banking sector was not known for its willingness to embrace
innovation. That's changing fast. In response to evolving customer
expectations, competition from established technology companies, and an
endless stream of well-funded and nimble start-ups luring customers with
innovative digital solutions, institutions of all sizes are reimagining their
approach to customer service and the role of technology in delivering their
products and services.

60
 ● Fifth statement questions whether people are willing to share their
personal data to get benefits in return at affordable fees.

Response No of respondents

Yes 10

No 29

Maybe 11

The survey reveals that majority of them are scared to share their personal data
because despite knowing benefits they still doubt about fraud or security
related problems. There can be other reason which is not giving them enough
information related to particular product and customer therefore being
clueless. The people who are ready to share their personal data are mostly
those who are well versed with updated technology and also keen about
ongoing transformation happening around and generally they belong to 20-40
age group people. Whereas there are people who have knowledge about the
updation happening in the banking system & its products but still want to get
stick to traditional banking products as they might feel those are less prone to
fraud.

61
 ● Sixth statement is regarding challenges people think in open banking
ecosystem

Responses No of respondents

Security 13

Customer’s willingness to share data 9

Privacy 22

Financial literacy 6

Firstly ,the most common challenge can be privacy because banking products
and services are chosen by customers based on to what extent it provides
privacy to the customer. Secondly it is the security it provides because
customers are already investing on the behalf of faith they have over the years
in the bank they have been looking and its products. So if banks try to not
update their customer regarding the upcoming changes, people easily start
losing faith and have no confidence to upgrade their choices.Thirdly,
customer’s willingness to share data is slightly less challenging because now
people are aware about pros and cons of traditional and modern banking
system. Lastly , financial literacy is seen as merely challenging because

62
majority of population is acquaint with technology but also rural areas find it
challenging.

● Seventh statement states what are payment preferences of people while

paying for any services.

Response No of respondents

Cash 24

Card 14

Online payment system 12

The preference for cash among younger millennials can be partly explained by
the fact that younger consumers may not necessarily have the same access to
credit that older consumers have or that they may have access to credit but
their credit score is a lot lower, which restricts their access to different
payment products.When you look at older consumers, they have always used
cash, and they are going to continue using cash. For younger consumers, it
again might be that this is the option they have on hand. Credit cards give you
spending power without the inconvenience of carrying around large amounts

63
of physical cash.You also get the convenience of purchasing items now and
paying for them in the future, which gives you time to get the funds if you
don't currently have them available. As long as you pay your bill in full each
cycle, you won't pay interest on any purchases. E-payment is very convenient
compared to traditional payment methods such as cash or check. Since you
can pay for goods or services online at any time of day or night, from any part
of the world, your customers don't have to spend time in a line, waiting for
their turn to transact. Nor do they have to wait for a check to clear the bank so
they can access the funds they need to shop. E-payment also eliminates the
security risks that come with handling cash money.

● Eighth statement states that there are situations when you pay in cash
and reason behind the payment in cash.

Responses No of respondents

Only cash payment accepted 26

Convenience 5

Security reasons 11

Budget control 8

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There are situations when only cash is accepted and according to this survey
this reason tops the list. Still people choose to pay with cash rather than card.
Another benefit of paying in cash is a sense of security as in not requiring to
share any personal details regarding the card. It is convenient to pay in cash
because while paying in cash the fear of any fraudulent activity is eliminated
which exists in the card. Also while paying in cash you know how much
amount to be spent, a person stays in control on contrary this thing is out of
control when you use card because you don't have limit.

● Ninth statement states how often do people switch banking service

providers.

Responses No of respondents

Less than 2 years 10

2-5 years 19

More than 10 years 21

The research which found that 42% of customers believed that their bank met
most of their expectations or exceeded their expectations. There can be many
triggers which cause people to switch providers. Retaining existing customers,

65
or winning new customers starts with trustworthiness, followed by delivering
a compelling proposition that provides value and then delivering it in a way
that provides quality customer service. Customers who switch providers of
their financial services products are more likely to be better educated and have
a higher income. They’re also more likely to be tech-savvy and Millennials.
Switching is not difficult for most products. It is not as difficult as people
perceive. Once someone has switched, they also realise it’s not as difficult as
they might have thought. However most people do not change the banking
provider for all of their banking products. Although 20% of customers have
changed the banking provider of at least one banking product, the switching
rates for individual product relationships is lower. People may change the
provider for an existing banking product, or acquire a new banking product
from a new provider, but they don’t typically change all of their banking
product relationships at the same time.

● Having searched for information, received a recommendation, or done

nothing, consumers can take a number of actions:
● Change to a new product from a different provider, replacing their
existing product and provider.
● Acquire a new product from a different provider while also retaining
their existing product.
● Remain with the existing provider but change to a new product.
● Remain with the existing provider but change the features of their
existing product (for example, repayment terms on a mortgage, or limit
on a credit card).
● We grouped these into three categories: consumers that
● Change the provider of their existing banking product;
● Retain their existing banking product but get a new product from a new
provider, and
● Remain with their existing provider.

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 ● Tenth statement states possible impacts of open banking on
commercial banks.

Responses No of respondents

Technically secure environment 13

Challenges from competing banks 6

Alignment of digital strategies 20

Operational efficiencies 11

Rise of open banking will impact commercial banks in many ways. It shows
that 40% of the total people feel that it will be a new way of aligning
strategies which have not been in place. Commercial banks have always tried
to innovate through various strategies but it didn't come out to the customers
as expected. So due to this reason open banking with its own protocol help
commercial banks in keeping place with all the products. 12% of them feel
that it will be a big challenge from competing banks if at that particular time
introduce an open banking ecosystem so it will be hard for banks to keep up
with the expectations to attract the customers. 26% of the total people feel that
introduction of open banking will lead to a secure environment because all the

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protocols of safety will be taken into consideration ranging from personal data
to keeping everything confidential. 22% of the total people feels that it will
lead to operational efficiency which in turn will help in smooth working and
eliminating inefficiencies.

● Eleventh statement states whether automation and human work going

hand in hand.

Responses No of respondents

Yes 24

No 8

Maybe 18

The survey suggests that 48% out of the total people feel that automation and
technology goes hand in hand. Automation does not mean the absence of
human participation. In fact, the cornerstone of a successful digital
transformation is your team of living, breathing personnel. Automation strives
to reduce the time these subject matter experts waste on mundane, repetitive
functions so they can contribute to your bank’s success in more valuable ways.
For example, chatbots can aid your support desk by answering low-level, easy
questions, so your staff can spend more time focused on the more complex

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questions that command a human touch.This strategy ultimately pleases and
delights customers: support staff no longer has to rush off the phone to handle
a lost password request, but can deliver a more thoughtful and engaged
solution for customers in distress. When it comes to the most sensitive issues
16% out of the total people prefer interacting with humans. While some banks
have gone so far as charging steep fees for branch visits to encourage digital
adoption, those leading the charge are those that bring together the best of both
worlds. Banking is changing, yet many community banks are still relying on
“the old way” of doing things. Cost savings for financial institutions that
successfully integrate intelligent process automation into their ecosystem of
technologies. Plus, automation initiatives are the foremost way to position
your bank for the future of finance.

● Twelfth statement asks people if they opt for Open Banking , through
which service providers will they be opting out.

Responses No of respondents

Your own bank’s App 14

TPP (Paytm) 27

No preference 9

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The survey reveals that 28% out of the total people prefer open banking
through their own bank’s application. Digital banking brings convenience for
both financial institutions and their customers. While customers save time and
hassle with banking on-the-go, financial institutions can save money on
physical infrastructure and hiring costs by digitising parts of their
operations.By offering frictionless and convenient, strong authentication
combined with risk management, our solutions protect digital banking
customers from external attack. They guarantee an ideal balance between a
user-friendly and secure online experience. Majority of people prefer third
party providers (TPP) for eg: Paytm. TPPs are authorised service providers
who integrate with open banking channels and render to businesses innovative
services on top of account data and payment initiation. They benefit from open
banking by having a considerably broader opportunity to provide their
services. By using open banking tools provided by TPPs, companies build new
services for end users and improve customer experience. But most
importantly, these companies get an impetus for further developments of their
business processes, unfolding other valuable opportunities:

● Full automation of accounting, including bank and non-bank accounts;

● Providing access to financial information to the auditors in automatic
way;
● Obtaining a commercial loan based on the company’s financial history;
● Centralised tracking of payment instruments issued to employees, for
example, corporate cards;
● Automation of salaries and taxes payment process through a single
interface.

Nevertheless, the banks themselves can also benefit from providing access to
their open banking channels or connecting to the channels of other banks.

● Thirteenth statement states whether people are ready to share their data
in return they get benefits.

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 Responses No of respondents

Willing to share 31

Not willing to share 8

Not decided 11

62% of the total people are willing to share the data for open banking and also
anything relating to digital banking. These are the people who believe in
hassle free transactions and also want their transactions to be done in quick
way without dealing with 10 people in the middle. But on the other hand 22%
of the total people are still reluctant to share data online. the industry basically
really needs to communicate the benefits to the consumer. Banks and credit
unions increasingly grasp the importance of open banking, but the term is not
at all understood by consumers because people want easier ways to manage
their money and that often involves the use of third-party apps that access
consumer financial data. The potential of open banking won’t be reached
without efforts to educate consumers on its benefits.

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 ● Fourteenth statement states different modes of entry by open banking
and financial institution which will have influence on the people.

Responses No of respondents

Creating new markets 7

Entering untapped customer segments 20

Partnership model in payments 23

The survey reveals that through various modes open banking can be adopted
and also reached out to various segments. Out of which 14% of the total
people think that creating a market segment will enable open banking to
function efficiently. With new innovative products and technology, which have
a limited substitution effect to the traditional banking services, at least in a
first stage (e-wallets, peer-to-peer, cryptos, and so on), big techs can gain entry
into markets. For example, when Alibaba introduced Alipay in China, it
substituted small cash transactions and did not have direct competitors because
Chinese banks at that time did not offer e-wallets services or provide similar
services. This may change over time as customers get used to substituting
existing products with new ones. Entering underserved or untapped customer
segments: Big techs have filled demand gaps in products traditionally not

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served by incumbents. For example, Amazon offers merchant lending to small
sellers in its marketplace platform who might not have accessed a bank loan
due to insufficient accounting records. In China, big techs offer microcredit for
unbanked rural populations and financing for small merchants with no formal
accounting records. Majority of them think that the partnership model in
payment is the best way because people have already been using the
partnership payment model. Eg: Paytm has been one of the greatest hits and
has been used by the majority of the people.

● Fifteenth statement states whether we are ready for open banking in

India

Responses No of respondents

Yes 14

No 26

Maybe 10

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When asked people whether they are ready to accept open banking as apart of
evolution in digital world , 28% out of the total people agreed to it because
people who had switched banks in the last three years were more than 50%
more likely to know what open banking was. And those intending to switch in
the next 12 months were more likely to know what open banking was. Despite
all the reporting on the topic, a majority of people in all generations are still
not aware of the term, or the concept of, ‘open banking’.Awareness was
highest among Millennials (Gen Y) and post-Millennials (Gen Z). These are
also the groups that are more willing to share information in exchange for
benefits. 52% of them were still not ready to accept because while they don’t
need to understand the mechanics of open banking, consumers will need to
understand the benefits it could provide and how they can access them.But
consumer education should not just be up to government. All banks and
potential accredited data recipients should be educating their customers and
potential customers about open banking, and in particular about the potential
benefits consumers can realise from sharing their data. People need to trust
that the information they share will be secure. They will also need to trust
open banking and trust the third parties with which they are choosing to share
their data. Ultimately open banking, and the move to an open data economy ,
will require greater levels of both data literacy and financial literacy, financial
capability and financial consciousness, if consumers are going to be able to
effectively assess the benefits associated with alternate pricing options for
lending, alternate savings options, and better budgeting and personal financial
management generally. But consumer education should not just be up to
government. All banks and potential accredited data recipients should be
educating their customers and potential customers about open banking, and in
particular about the potential benefits consumers can realise from sharing their
data.

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 4.1 ARE BANKS READY TO HANDLE THE DISRUPTION IN
BANKING SECTOR?

The Indian banking sector has witnessed rapidly increasing stress in the last
couple of years with NPAs (non-performing assets) leapfrogging from 3 per
cent to 14 per cent of total assets. The resultant erosion in capital base, after
providing for NPAs, has crippled banks from processing new advances.

Analysts believe the Indian banking sector poses the biggest challenge for the
economy when the government is trying hard to boost employment,
investment and growth. Analysts also argue that the government should either
privatise public sector banks or give them full independence.

But they all miss the point. By doing do, banks will only become less
competitive than before. Loans and NPAs are only one part of the problem. If
they don’t take cognisance of events that are predictors of future, they would
end up seeking bailouts.

No one can precisely predict the future, but preparing for eventual disruption
is something everyone should do. Ability to detect early warning signals is a
skill that even public sector bankers can acquire.

There are a few time-zero events — ones that will have high impact on a
business — taking place globally. Bankers must develop the skill to read the
warning signals from these events and decide on what to do next.

Time-zero events

More than 50 per cent consumers find traditional consumer banking irrelevant:
Imagine an autonomous, financial life — a money-enabled life — with your
personal financial advisor accessible wherever and whenever you want
through screen-based (mobiles/tablets) and voice-enabled (Amazon
Echo/Google Home) technologies.

As a result, banks will not be needed any more for traditional consumer
banking. There will be almost no bank branches because mobile-phone apps
and online account management take their place.

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New fintech solutions to consumer banking services (a combination of bank
and financial advisor applications) with the convergence of technology will
allow companies such as Amazon to be able to access bank accounts and buy
products for you without your having to think about it (frequently-bought
items for daily consumption), or buying other products through voice-enabled
technology.

Meanwhile, crowd-lending platforms and fintechs will become so powerful in

credit-default prediction that they become the cheapest and easiest platform
for lending. Add to that the new developments in blockchain.

Artificial Intelligence (AI) creates transparency across 50 per cent of business:

AI-enabled financial advisors can help you manage your money. Such systems
will tell you it’s time to move your utility provider base on your usage and
expenditure patterns. It could tell you that it is time to change your credit card
to save on interest and what the least expensive way is to send money
overseas.

While customers trust banks to hold their money and personal data, they are
sceptical about banks cross-selling products and services without keeping
customers’ interest in mind. AI in banking can help build customer trust by
providing contextual and timely advice that keeps customers’ interests in
mind. It may cannibalise their existing revenue streams but will bring in
radical transparency hitherto unknown.

If banks fail to use digital technology to replicate the banking intimacy in

remote villages, then a disruptor will do it and make banks irrelevant. Will we

see any bank using AI to literally put customers first, at the risk of short-term

losses?

Technology companies capture 25 per cent of traditional banking revenue:

Non-bank tech giants (Google, Apple, Alibaba) and fintech companies
compete with banks in payments, lending, and foreign exchange services.
These new competitors will open up entirely new kinds of services and enjoy
substantial growth, while revenue pools will be constantly shrinking for
traditional banks.

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An Amazon bank account offering lending and deposit services as well as easy
payment solutions when ordering from its site could attract lots of customers
from incumbent banks.

More and more fintechs are mushrooming, fulfilling customers’ needs of

simplicity, convenience, availability, speed, transparency, and reliability, by
offering banking products such as online-only bank accounts. Some of these
challengers have already obtained a banking licence and are also able to run
business models with free bank accounts and payments globally. Customers
will opt for better experiences.

Open banking arrives and more than 50 per cent of customers give their
permission to share their data with third parties: Whether customers like it or
not, the government has made it mandatory to provide Aadhaar to even
relatively new players who don’t have good privacy policies; neither did the
government prescribe any privacy norms.

In 2018, the UK put into place the PSD2 (Second Payment Services Directive)
to require its nine largest banks to share information outside their walls in a
secure, standardised format. This initiative was motivated by several
perceptions among regulators: that there was insufficient competition, that
customers were overpaying for things like overdraft fees, and that money was
just sitting in accounts failing to reward the consumer with interest on savings.

While it is not clear yet what services will be developed as a result of the
move toward open banking, the potential to completely rewire the banking
sector is significant. As an analogy, who could have predicted that Google’s
mapping project would facilitate the founding and growth of
geo-location-dependent services such as Uber and its copycats elsewhere?

Open banking has the potential to create a massive shift of power to

consumers, as their data is no longer locked away in legacy transaction
systems. Data that would support giving loans to people with “thin files” of
conventional information could potentially open up entirely new customer
segments for related services. (Open banking is a collaborative model in which
data is shared through APIs between two or more unaffiliated parties to deliver
enhanced capabilities to the marketplace).

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Among the practices that open banking is likely to change is the current model
employed by many fintech firms of “screen scraping,” in which users provide
their actual log-on credentials to a third party, which gives them far broader
access to user information than is necessary, and creates a major security risk.

4.2 4 CHANGES CUSTOMERS WANT THEIR BANKS TO MAKE

With new competitors on the horizon, the best bet for traditional banks is to
give people what they want.

Until recently, the banking sector was not known for its willingness to
embrace innovation. That's changing fast. In response to evolving customer
expectations, competition from established technology companies, and an
endless stream of well-funded and nimble start-ups luring customers with
innovative digital solutions, institutions of all sizes are reimagining their
approach to customer service and the role of technology in delivering their
products and services.

That's great news for customers who have become accustomed to the rapid
adoption of technology in other industries like online retailing. Regardless of
the channel, that exposure puts the pressure on financial institutions to step up
their use of technology and their ability to deliver personalized interactions
while also providing seamless account access and a full range of services.

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So in the face of shifting customer expectations, what changes can we expect?
And how can a bank with an interest in bolstering its competitiveness
accelerate its use of technology and its ability to attract and retain increasingly
demanding customers? Here are four changes we believe customers want to
see in banks as well as guidance on how banks can make them happen.

● Sell to me like you know me

One of the fastest ways to alienate existing or prospective customers is to

promote something they don't want. Through digitization, which allows
technology to be embedded in every aspect of the customer service
experience, banks can unleash the power of personalization. As the name
implies, personalization is the opposite of a one-size-fits-all approach. Instead,
a company markets a product or service tailored to specific individuals or
customer segments. Rather than blanketing every customer with the same
message, personalization relies on a data-driven approach, designed to create
messaging that will resonate with individuals and encourage action. For
example, if an individual is a part of a group whose accounts show purchases
for baby products, when that customer next visits their bank website, the
messaging and images could highlight how the bank can support the financial
needs of a growing family.

● Let me access my account when and how i want

The ubiquity of smartphones makes mobile banking the preference of millions

of customers. Nonetheless, regardless of the channel they choose, they still
expect a seamless experience. In an omnichannel model, every touchpoint, be
it online, mobile or in the branch, should provide a customer with access to the
services they need, but with a consistent brand experience.

In spite of the dire predictions of their demise, there is still a role for physical
bank branches in an omnichannel model. Innovative banks see their branches
as a complement to their push to digitize operations. Instead of staffing
branches with employees whose primary role is to process routine
transactions, many leading banks are increasing their investment in
branch-related technology like self-service kiosks.

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Access to a digital channel in branches allows for a consistent customer
experience. It also releases employees from routine tasks by allowing them to
focus on higher touch, more involved transactions and services requiring
greater sophistication. So, instead of replacing it, going digital allows a bank
to reposition the branch and deliver face-to-face personalization.

● Advice me on major final decisions

At nearly every stage of adult life, individuals must make important financial
decisions. Whether financing a house, purchasing a car or selecting the best
retirement plan, advice is often needed. Through the segmented data generated
and recorded in customer accounts, banks typically have all the information
they need to develop tailored recommendations.

● Protect my money and identity

A recent article suggests that younger people do not trust traditional banks as
much as new financial technology companies. With this in mind, it's even
more important for a bank to be able to protect every customer's personal
information and their money. Banks must strike a balance between delivering
sufficient security and shifting the responsibility to the individual account
holder. Banks must also deliver a consistent security experience by ensuring
the protocols for specific transactions do not vary significantly by sales
channel — with the exception, of course, of risk factors like a new mobile
device.

4.3 YES BANK LAUNCHES INDIA’S LARGEST API DEVELOPER

PLATFORM

YES Bank announced the launch of YES Fintech Developer, India’s largest
API sandbox with 50+ virtual APIs at Bengaluru, marking the evolution of the
Bank’s technologies to open banking. This is in line with the bank’s strategy
of keeping customers at the core while ideating and co-creating solutions. YES
Bank was the first bank in India to launch APIs that allowed integration with
the technology systems of corporate clients.

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The sandbox builds on the Bank’s strategy of using API banking as an enabler
to customize digital solutions for its clients. This will not only help corporates,
MSMEs and startups to identify ‘best-fit’ APIs based on their sectors but also
allow them to test the APIs with their app in a secure environment. The
sandbox will enable clients across sectors to visualize multiple banking use
cases, customized for their application and understand possible integrations &
functionalities of the Bank’s APIs.

YES Fintech Developer, also provides a boost to the Bank’s effort of

co-creating innovations with Fintechs, startups and the developer ecosystem to
enhance customer experience. While API suites from banks have helped such
partnerships, it is often difficult for Fintechs and startups to experiment with
live APIs to build new features and capabilities. The YES BANK sandbox will
ease these concerns by providing a secure virtual environment to test, train and
develop solutions with banking integrations. Developers can complete
integrations in the environment and mimic how their solutions would work in
a ‘live’ environment. Once they are comfortable, they can move to subscribing
the APIs.

Through the sandbox, YES BANK will grant access to APIs across four usage
categories including account management, payments, cards and CRM with
operations such as –

● Accounts: Account Opening; Account Management; Customer

Portfolio

● Payments: Beneficiary Management; Fund Transfer; Bill Payment;

Recurring Payment

● Cards: Credit Card; Debit Card

● CRM: Lead management; Customer Service

● Partner APIs: Sandbox APIs of partner organizations across sector

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 4.4 THE IMPORTANCE OF OPEN BANKING AND ANALYTICS IN
THE INDIAN BFSI SECTOR

The Regulatory Authority of the country (RBI) is coming out with their vision
for Payment and Settlements 2019-2021 which was indeed very enterprising
as it promises to make the country a cash-lite society. We also had Niti Aayog
(Transforming Committee of India) proposing a significant Rs 7,500-Crore
plan for Cloud Computing and Artificial Intelligence push which includes
establishing “AIRAWAT” a cloud computing platform for promoting research
on AI. It certainly is a step in the right direction, given the changes that we are
seeing in the world around us and it was time that we started work in this
direction. In between all these he proposal was to end Data Monopoly and
make data available to all, in other words, move the financial system towards
Open Banking, which brings us to some very important questions like:

Who owns customer data which as of now is lying with a few big monopolies
who act as custodians of data?

What is Open Banking, it basically is creating a Data Architecture where a

network of Institutions can share the data through APIs (Application
Programming Interfaces). It determines creating guidelines on how customer
data can be created, structurally stored and securely accessed. If this happens it
would open the doors to a lot of innovation and entrepreneurship opportunities
and at the same time benefitting the single most important entity and that is the
Customer. As a country, we have more than a Thousand Fintech firms which
are growing at a significant growth rate and as per estimates, we are looking at
somewhere around $73 billion worth of transactions in 2020 which
corresponds to more than 20% growth rate from where we are today. Analytics
and AI are already changing the way we are looking at data and today every
organization wants to be known as a data-driven organization. Analytics is
slowly turning to be among one of the core competencies of every
organization and we have a lot of fintech startups which are working on
cutting edge technologies but are hampered by right data not be available to
them. Open Banking will certainly be the enabler as in essence, it will provide
access to insights on how the data can be used to launch new products and

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provide benefits by taking a holistic view of the data rather than keeping it
confined to the prerogative of chosen few.

But as we all know with great powers comes great responsibility and with
such huge and sensitive data, we will need to have proper guidelines and
standards to protect the privacy of the customer. It would not only be restricted
in making the customer click the small checkbox at the bottom or Rules and
Regulation page but would mean properly making the customer aware of how
the data is going to be used and responsibility will completely lie with the
entity using the data.

4.5 OPEN DATA AND OPEN BANKING:WHAT DOES THE FUTURE

HOLD

Digital technologies have changed the financial services forever. With more
and more customers wanting to access personalised digital experiences online,
or on their mobile devices.

Even before the Covid-19 pandemic, researchers revealed how retail banks are
adapting, with open banking and digital banking becoming key strategic
priorities globally.

Of those surveyed, 41% saw their business models evolving to become true
digital ecosystems, with 28% also expecting to become an aggregator of
third-party banking and/or non-banking products, alongside providing their
own products. Interestingly, 36% said their top innovation strategy focused on
building greenfield digital banks, as part of their wider focus on digitisation,
open banking and fintech partnerships.

The research also found that banks see new technologies like AI, machine
learning and blockchain, alongside regulation on digital technology and data
protection, as having the biggest impact on the sector, both in the short and
longer term.

● Covid-19 is accelerating digitisation and the need for personalised

customer experiences

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The socio-economic impacts of the Covid-19 pandemic mean that more and
more customers, including small and medium sized enterprises (SMEs) need
rapid, bespoke support. For organisations, that means having an in-depth
understanding of a customer’s financial health, affordability and
creditworthiness, and being able to provide the personalised response they
need.

In parallel, the pandemic is also driving the move towards a more digital
world. Research by McKinsey highlighted a 10%-20% rise in digital banking
use across Europe in April, making it even more important for organisations to
fully embrace digital channels.

To survive and thrive, organisations will need to innovate and grasp new
opportunities, while understanding the risks and challenges involved. The
disruption to the economic landscape this year has led to changes in consumer
spending – organisations need to be able to adapt and innovate quickly in this
evolving landscape.

● Data is key to understanding your customers like never before

Every financial transaction generates data, giving organisations a hugely

valuable resource right under their nose. Before open banking, very few
organisations could make use of it, but the democratisation of data is
transforming the landscape.

The value of data lies in being able to extract the insight you need to make the
best decision, often in seconds. Traditionally, data has been owned and
managed by IT departments, but with data insight needed to drive every
decision, data is becoming democratised within organisations too.

New data sources including open banking are giving organisations access to
rich, up-to-date information, but to make the most of it in these challenging
times, businesses will also need to embrace advanced analytics tools capable
of connecting disparate datasets with customer-mapped data aggregation.

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Digital technologies, data and advanced analytics are the means, but it’s
important to remember they’re not the end goal in themselves. The end goal is
being able to thrive in a digital, rapidly-changing world with customers
expecting ever-more personalised experiences. That demands a clear strategic
vision for what digital transformation means bespoke to your organisation, and
your customers.

● Take a step back and look at the customer experience and your ideal
customer journey. What data do you need in place to do that?

● What data assets are you using in your decision making, and what data
assets do you want to use? What data will add value to help you make
more accurate decisions?

● Pick a flexible tool that allows you to add and evolve your data and
decision making.

● Let technology support your decisions. It can predict, inform and score
customers accurately using data based on your lending rules.

● Open data and open banking – what does the future look like?

Open banking has given organisations a way to gain customer consent to

access and then interpret the right financial data, to offer the right support at
the right time, alongside personalised products and services including money
management tools for example.

In a new era of digital banking in the post-Covid-19 economy, personalisation

has taken on a new urgency, with consumers wanting fast, flexible, tailored
support, and organisations needing a rapid, in-depth understanding of
individual customers’ affordability and creditworthiness.

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 4.6 ADVANTAGES AND DISADVANTAGES OF OPEN BANKING

Open Banking requires data related to credit cards, statements, and account
types and everything that includes the customer’s finances. Once ready, this
information is synchronized with the various emerging applications and starts
an exchange process that facilitates the life of anyone thanks to the bank.

Of course, there are many advantages and disadvantages of online banking.

The evaluation of them is what has generated many questions for its global
application.

ADVANTAGES OF OPEN BANKING

With Open Banking come some advantages of online banking that benefit
customers and bank owners. Some of them are:

● Helping customers in their operations: obtaining answers and services

tailored to each person’s needs becomes easier with Open Banking.
This is because, due to the infinity of APIs that exist and that can arise,
everything is simpler. All you need is access to technology. Time spent
is reduced and operations are automated.

● Centralization of services: with Open Banking, banks once again have

full control over the various services their customers need: advice,
loans, transfers, and financing. Thus, everything is done with greater
order and under a single administration.

● Increase in the financial market: with the arrival of more clients in

Open Banking, the diversification of APIs and services will be greater.
In this way, there will be numerous offers adapted to the needs of
everyone.

Advantages of Open Banking to Customers

● Customer reaps the benefit of choice:

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Most banks offer similar services that are limited in scope. More importantly,
most banks aren’t really good financial advisors. With Open Banking,
customers can reap the benefit of choice as they have multiple options, or
service providers to choose from. Therefore, you are not forced to use any
specific software because it is bundled with your account.

● More customized and relevant product offerings:

Most banking apps have the same set of service options. With the entry of
newer service providers, the factor of customization and service
personalization will be introduced, which will massively benefit customers.

Advantages of Open Banking to Fintech

● Easy Way For Banks to Extend Their Services:

Most banks have embarked on the Fintech journey. Open banking provides
them with the opportunity to expand their offering sand include more services
under their umbrella.

● Meet Customer Requirements:

Today’s customers are always looking for more. With open banking, financial
institutions will have so much more to offer to their customers and keep them
satisfied.

DISADVANTAGES OF OPEN BANKING

Some of the drawbacks of Open Banking are:

● Low customer credibility: until now there has been an apathy or lack of
credibility on the part of customers towards Open Banking. It is partly
due to the fear of sharing their data, as well as to their lack of
knowledge of how it works.

● The Fintech: the growth of those companies that have replaced the
banks is a major drawback for Open Banking. The Fintech market is
growing. Their services are diverse and more and more there are a

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 large number of them in all countries. They are simple, fast and do not
generate so many expenses for customers.

● It removes the interpersonal relationship with the customer: because

everything is handled digitally, the face-to-face encounters between the
customer and the bank are getting smaller and smaller. This can lead to
a breakdown in the relationship.

Disadvantages of Open Banking to Customers

● Relatively New:

While APIs have been around for some time, Open Banking is a relatively
new concept. This means a lot of trial and error situations are yet to come.

● The Security Concern:

With the rise in cyber threats and crime and when software/applications are
available for free, it would be wise to first check the authenticity of the
software before allowing it to connect to your banking information.

Disadvantages of Open Banking to Fintech

● Limiting opportunities:

With multiple financial service providers, there will come a point of

saturation, where banks and financial institutions will have to introduce
innovative and unique services as a differentiating factors from competitors.

While open banking comes as a revolution with a plethora of opportunities for

all, it also brings along with it quite a few risks that cannot be overlooked.

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4.7 THE CHALLENGES AND OPPORTUNITIES OF OPEN BANKING

In a holistic, open data world, the volume and variety of data available can
help you personalise your products and services, while making your credit
decisions fairer and more accurate. That’s a huge opportunity for businesses,
but it’s also a challenge.

Consumers expect a fast, personalised, seamless, multichannel customer

experience, but they also want to know their data is safe, secure and won’t be
shared without their explicit consent. Compliance is also key of course, with
regulatory pressure to improve transparency and protect consumer privacy.

Without the right analytics expertise, technology and quality control, the data
opportunity can turn into a data liability, especially with more and more data
being generated all the time.

The solution lies in designing digital services around customer needs, as many
of the new open banking-enabled financial services demonstrate. Transposing
existing services into the digital environment is no longer enough. What’s
needed is a more radical approach that puts customers’ needs and experience
first, even if that requires significant change to your operational culture,
technology infrastructure and policies.

Anything that stands in the way of this kind of transformation, from inflexible
legacy systems and processes, to unconnected data silos and service channels,
should be considered as challenges that need to be addressed and overcome.

● Trust and control

You must build consumer trust by being transparent and by using data
effectively, securely and within the constraints outlined by each customer.
Therefore, having access to effective control mechanisms – ones which can
manage the millions of different boundaries of consent – will be crucial.

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 ● The value exchange

The well-reported value exchange is still pertinent. While our research shows
people are more accepting and more aware of the benefits of sharing their
data, you must still demonstrate value to gain, and keep, their consent.

● Data mobility

In an open banking world, data is shared with the organisations customers

choose to share it with. Being able to mobilise data in and out of your
organisation effectively will be key to enhancing customer relationships.

● Technology and innovation

Data sharing goes beyond simply providing access – it begins with putting the
right standards and technology in place. With the right tools to intelligently
use consumer data of this volume and variety, the potential for innovation is
huge.

● Artificial intelligence and machine learning

With the help of artificial intelligence and machine learning you can make
fine-tuned decisions on the spot. Rather than pushing each product or service
individually, it’s possible to say, ‘let’s identify the customer, understand the
customer, and then make the decision.’ Businesses need to move from a brand
or product approach to a customer centric approach. This will enable a
business to have informed, relevant, personalised conversations with their
customers.

● Convenience is king

Speed and convenience are the keys to success in many digital experiences for
both consumers and businesses. Combining speed and convenience with a
worthy value exchange and you have the ingredients for a winning
proposition.

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 4.8 OPEN BANKING , OPEN RISK

While the benefits of open banking look to keep it in vogue and its adoption
rate climbing, privacy, and security drawbacks remain potentially significant.
The biggest danger for the banks is they have provided the service as agreed
with the regulator, but once beyond their walls, privacy and security can go
awry. And that's not good for any of us, customers, or banks.

Under open banking regulation, very few safeguards exist to protect customer
data should it fall into the wrong hands. For example, malicious actors could
effortlessly establish a fintech for the sole purpose of swiping important
financial data. Risks also extend to the exploitation of legitimate fintech
infrastructure. All it takes is an attack on the central server of one of these
fintechs—or even via the app itself—for bad actors to gather what they need
to impersonate the users.

In addition, many fintech apps still use outmoded and insecure two-Factor
authentication (2FA) in the form of SMS or email to verify transactions,
which is no longer fit for purpose. Attacks arising from sim swapping and
email hacking can easily circumvent 2FA in its most basic form.

But it's the end-user that is at most risk of attack. Phishing emails appearing to
be from a third-party provider asking for a password or other pieces of
sensitive information could place the user’s data in jeopardy.

While many consumers have been conditioned to ignore such communication

from banks, apps have a tendency to leverage their mailing lists to push users
a new product, service, deal, or even a newsletter. As such, unsuspecting
consumers could be caught off guard and unwittingly provide access to
malicious actors and hackers.

In the same vein, open banking makes it very easy to send the wrong money to
the wrong person. Bad actors achieve this via invoice fraud—or sending a
payment in response to an email with a sort code and account number.

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The globalization ushered in under the innovation of open banking also
presents a regulatory risk, on a global scale. No longer are due diligence
processes limited to one country, language, or regulator. It’s now paramount to
have a real-time pan-EEA view of all regulated entities so customer data and
financial information can be protected, and the Open Banking ecosystem can
operate as intended, in a secure way. That’s where verified digital identities
can counter this.

Owning Our Data

Disclosing financial data was always bound to end in tears. But that doesn't
mean it has to stay this way. Instead, consumers and businesses on either side
need to control and secure that data themselves. Digitally verified Identity and
payment may prove to be the answer here.

Harnessing biometrically validated digital IDs underpinned by the

immutability of the blockchain and connected to the payment source, not only
removes the onus on third party businesses to keep our financial data safe but
it can also remove the risk of fraudulent push payments and identity theft.

Rather than using the antiquated username and password combination coupled
with insecure SMS and email verifications, the customer could frictionlessly
tie their digital ID to their bank through apps, platforms, and services—all
without intermediaries endangering the customer's privacy and security or
indeed that of the bank itself. In turn, the bank can provide the customer with
their rightful access to the services and products with confidence.

Digitally verified IDs also help mitigate (even eradicate) push payment fraud.
With verified IDs on either side of the transaction, payment requests made
outside of the established channels cannot and will not be processed.

Perhaps most importantly, digital IDs ensure that the person who is logging in
is the rightful owner and that the service connecting a user to their bank is
doing so in a secure environment.

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This also caps the chance of data breaches with all information
cryptographically secured. Additionally, with the use of technology such as
zero-knowledge proofs, the information can be cryptographically proven
without revealing any information. Upon exceptional requests or functions
from the customer, additional verification can be sought through the digital
identity in the form of biometrics, from controlled devices, and or additional
biometric verification.

Blockchain can also help evolve the system by recording private transactions
and activities to inform and reinforce future legitimate interactions and help
prevent irregular ones.

This will undoubtedly increase the viability and success of open banking,
enabling an entire ecosystem of services to securely offer more to consumers
and cultivate further innovation within the financial sector—bringing easy
privacy, security and peace of mind to both individuals and banks.

Risk management

Open Banking undoubtedly going to change the way banking services are
consumed through better collaboration between banking / financial institutions
and Fintechs/Startups. Banks across the globe have worked on or have
initiated work to open up its banking services through APIs and building new
delivery models with Fintechs. The same story goes in India, also where
leading banks are working on Open Platforms.

To build a scalable and sustainable business model on Open Banking, it is very

critical to embed a robust risk management framework as an overall program
else; it has all possibilities to derail your growth in such a competitive
landscape.

Risk Management framework for Open Banking needs to be holistic and

covers all crucial components such as

● Cyber Security:

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This becomes more critical when you are talking about Open APIs over the
internet and building an integrated platform to consume & deliver banking
services.

● Regulatory Compliance:

Though banking services will be opened up for consumption by third parties to

achieve through their platform, underlying responsibilities to ensure
compliance will remain with Bank, be it for KYC for customer acquisition, or
anti-money laundering for financial transactions.

● Data Privacy:

In addition to cybersecurity, open APIs talk about data exchange between two
parties, then ensuring the protection of data shared between parties is
protected. Robust consent management framework with regulatory guidelines
is essential to build an open banking platform

● Contract Management:

Risk management framework needs to look at better contract management

between parties holistically, not only at partner -services level but also API
level of contract too.

● Product Management:

Open banking will throw innovation wide open to allow banks & Fintechs to
experiment with productization. For example, Payday was innovative lending
product. So, it is also vital to build a robust procedural framework to allow
innovation at the product level while continuing to ensure compliance with
internal product guidelines.

So, it is crucial to build a framework to:

● Assess Risks across segments

● Review all products, processes, technology and partner programs

● Build Control requirements at the API level, Integration layer

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 4.9 BIG TECHS: BIG BENEFICIARY OF OPEN BANKING?

Post-Fintechs arrival & building a new value proposition for customers, Banks
adopted a collaborative approach to work together and develop new products,
business models, and value drivers for customers. Emerging demands from
Fintechs led to banks opening up its services and data through APIs and drive
API enabled Banking, and now widely been termed as Open Banking.

Various business models evolved across financial services, be it payments,

lending, investments, etc. Fintechs has grown in this space widely, and banks
across the globe started opening up APIs and worked together with Fintechs.

Though Fintechs have been mainly benefitted in the entire business of Open
banking, Big Tech firms ( widely been used for Google, Apple, Facebook,
Amazon, Microsoft, and others) spotted significant opportunities to enter into
financial services space. Be it Sundar Pichai or Jeff Bezos, all have clearly
shown their deep interest in the financial segment and esp in Banking.

Open Banking made things easier for them as they could use banking services
from Banks through APIs and build better customer engagement & value
proposition for their set of customers. Before getting into advantages big techs
having others to fast track their financial services, it is essential to look at the
transition made by some of these big techs into banking.

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Amazon:

In the race of widening banking services, Amazon is taken big jump by leaps
and bounds with venturing into banking services space with payments to
lending to selling insurance. By looking closely, it would look like Amazon is
building the future of banking within its ecosystem. Though Amazon is
mostly trying to do lots of banking services in partnership with Banks, it is
investing heavily in Fintechs to widen its portfolio.

Amazon Pay has already been successful in most of the region with its digital
wallet kind of functionality. In India, Amazon has implemented UPI
functionality to its Amazon Pay and built a complete payment app to facilitate
funds transfer, bill payments, recharge, and other features. Amazon took a big
step towards strengthening its payment game by integrating with Worldpay, in
2019, to act as a back-end intermediary between banks and credit card
companies.

Microsoft

Though, Microsoft has yet to provide direct banking services, and it has made
its intention clear with a partnership with plaid to make Excel as Fintech App.
Microsoft has partnered with #Plaid to let people automatically import their

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bank and credit card account data into a new personal finance tool called
Money in Excel.

Apple

Always hailed as one of the most innovative companies, Apple has already
worked with Goldman Sachs and Mastercard to launch Apple Credit Card for
its customer, which is directly integrated with iPhone. Apple already has
Apple Pay, a digital wallet kind of functionality on the iPhone, which allows
customers to add money to it and use for contactless payments as well as for
online transactions.

Though there have been more use cases across financial services, these big
techs are operating into or getting into it. Open Banking undoubtedly gave
them the edge to keep exploring and adding banking services to their wings.
But there has more, which does provide them with the advantage to launch and
pose formidable threats to Fintechs and the banking ecosystem. We looked at
some of the reasons as follows:

● Ecosystem:

Big techs have developed their ecosystem well where they own their
customers, their value chain. For example, Amazon has its e-commerce
platform with its customers, resellers, and then coupling with other value
propositions from Prime, Alexa, etc., and all well integrated. This makes it
easy for them to plug in financial services and operate it within their
ecosystem.

● Platform Enabled Banking:

Technology is the backbone for Big Techs on which they have built on their
business. Platform-based architecture has been core to its technology, which
allows them to develop, build, launch, and scale various new features and
solutions at a rapid pace. Micro-services based architecture enables big techs
to plug in easily with Banks using APIs and roll out financial services to their
customers.

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 ● Trust:

Undoubtedly, Big techs enjoy their fan following, be it Apple or Google

because of their ability to the superior service model and sustainable quality.
Banks have yet been able to hold their fort in the age of Fintechs primarily
because of the trust factor. When these big techs bring a similar level of trust
to customers to use banking services from them, it makes it easier for them to
roll out banking. Big Techs power their trust factor with Banks and play well
on the positioning.

● Stronghold on Customer Engagement:

Big Techs have known for building the best of class customer engagement for
their customers through building a robust interactive model with continuous
engagement.

● Big expertise in AI/ML:

Artificial Intelligence and Machine learning have played a significant role in

transforming financial services and digitization. AI/ML developed model has
led to the emergence of new lending models, better credit underwriting
processes, and new products. Big Techs have developed superior capabilities
around AI/ML and have used successfully in their existing product and service
stack to power their growth. The same skills on AI/ML provide them an edge
to couple their financial services.

● Capital:

One of the reasons for the big growth in Fintech & startup evolution is the
availability of capital. Today, the majority of available capital, mainly through
Venture funding, has gone into technology. To drive innovation and customer
outreach programs, ease of capital helps startup to drive their business model.
Big Techs have been widely placed on cash, which makes it easier for them to
drive innovation and spend well on customer acquisition programs.

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 CHP 5: CONCLUSION

● Open Banking stepping stone to Open Finance:

By opening APIs and removing the barriers to accessing financial data, open
banking has enabled companies of all sizes to focus on creating innovative
new products and challenging the status quo.

Open banking users are predicted to double by 2021, with around 40 million
people around the world choosing to aggregate their bank accounts and access
new services. It’s possible that the Covid-19 pandemic is fuelling this trend,
increasing the need for consumers to have a single view of their finances and
take control of their financial health.

Globally, the open banking market is expected to reach $43.15 billion by

2026. Those organisations who invest in data aggregation and advanced
analytics as part of their digital transformation will be able to monetise open
data and offer a more customer-centric banking model.

Beyond the PSD2 regulation, open banking is driving open finance – an

industry-led initiative looking to increase the scope of financial data sharing
beyond payment accounts.

Opening up non-payment customer account data, such as data from savings,

mortgage and investment accounts, would unlock far more fintech products
and services for customers. The need for open finance to be
commercially-driven, as well as regulatory, enabling financial institutions to
create and support the infrastructure needed to expand and optimise data
sharing.

A further example of the development in the opening up of data is that of the

government’s Pension Dashboard which will enable a person to see all their
pension savings in one, complete place. Experian provided guidance and
support in the original POC (proof of concept) for the Pensions Dashboard and
are now working with Origo and other providers to help bring this to market.

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Our data pinning technology will help to create a single, integrated view of a
customer’s pension provision.

● Open Banking- data security and agility

For financial service providers of all sizes, one of the biggest risks associated
with open banking is data security, including the loss or theft of personal data,
fraudulent transactions and data protection breaches. As a regulatory initiative,
open banking places great importance on the protection of personal data and
has safeguards built in, but organisations have a key role to play too.

It goes without saying that any technology must come with security built in.
As legacy systems often demonstrate, architecture designed at a time when
data wasn’t so open and so vast, and when hacking wasn’t as sophisticated as
it is today, can leave businesses vulnerable to security issues. By outsourcing
your technology requirements to a cloud-based solution you can access a
continually enhanced platform that can be quicker to respond to emerging
threats.

● In order for people in INDIA to adopt the new opportunities offered by

Open Banking, financial providers will have to convince them of the
relevance and practicality of their innovative new services. Banks have
been cautioning us for years about the need to keep our personal
banking data secure. Open Banking means that message is going to
need modifying and consumers will have to be persuaded to change
their attitudes and behaviours. The potential is clearly huge but it will
require effort to realise it.

● It may be compliance that has pushed banks to invest in open banking,

but there’s no doubt that the movement has numerous other benefits
with tangible financial impacts. Many of these benefits, such as direct
improvements to customer satisfaction and digital agility, resulting in
increased customer lifetime value. However, open banking also
improves security, opens new doors for collaboration, and allows

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 banks to make bigger plays with additional financial products and
services of their own.

● Customers must be educated about multi-factor authentication coupled

with biometrics while using third-party access points to protect against
identity theft. Banks must constantly monitor against potential security
breaches and have an effective and immediate remediation strategy in
case of an actual breach.

● The path to open banking is definitely riddled with challenges but the
journey is inevitable. Banks must open up but only after ensuring a
solid security process – very similar to installing a protective mesh to
keep away the insects before opening the windows to your house for
fresh air and light and keeping an insecticide inside the house to tackle
cunning miscreants which may pass through the mesh.

● With a bank in your hand, you can integrate with fascinating apps like
Artificial intelligence or a Virtual reality to make spending and saving
a fun experience. Banking may have transformed from Cheques to
Demand drafts to Mobile banking to invisible banking to connected
banking to Digital banking, but the underlying statement remains intact
and, i.e., – Customer need to be valued. And Neo Banking is just the
right offer to its tech-savvy customer who attracts savings in time and
money.

● Whilst the COVID-19 pandemic has slowed down the pace of life in
most areas, it hasn’t slowed down innovation within the financial
services sector, as providers look for ways to gain a competitive edge
in the post-COVID landscape. We’ve seen faster and further movement
towards online and digital services, and that’s brought new solutions
and turbocharged development for open banking.

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 ANNEXURE

Awareness & Perceptions about Open Banking

As a part of my research project, I am conducting a survey about awareness &

perceptions about open banking. Before Filling this form, I will give you an
idea regarding what does Open Banking mean?

Open Banking is the system of allowing access and control of consumer

banking and Financial account through third-party applications.

Open banking in India has made its presence through Unified Payments
Interface (UPI), a system that powers multiple bank accounts into a single
mobile application (of any participating bank), merging several banking
features, seamless fund routing and merchant payments into one hood.

*Required

1. Are you aware about the concept of Open Banking? *

Yes

No

Maybe

2. What do you see Open Banking as? *

Disruptive technology

Innovative competition

Convenient

Market complexity

3. Do you think India is matured enough for Open Banking? *

Yes

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No

Maybe

4. Do you think with rapid changes in products and services of the

banks, client expectations are changing as well? *

Yes

No

Maybe

5. As a customer, would you be willing to share your financial data

with a third party to meet your requirements at affordable fees? *

Yes

No

Maybe

6. What are your challenges regarding Open Banking? *

Security

Customer’s willingness to share data

Privacy

Financial literacy

7. What is your general preference for payments when you are

shopping or paying for services? *

Cash

Card

Online payment system

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 8. In situations where you pay with cash-what are the main reasons
for cash payment? *

Only cash payment accepted

Convenience

Security concerns

Budget control

9. How ofen do you switch banking service providers? *

Less than 2 years

2-5 years

More than 10 years

10. What will be the impact of Open Banking on commercial banks? *

Technically secure environment

Challenges from competing banks going digital

Alignment of digital strategies

Operational efficiencies

11. Do you think automation & human work go hand in hand?

Yes

No

Maybe

12. Through which digital mode you will opt for Open banking? *

Your own bank's application

Third party provider eg:(Paytm)

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I don't have any preference

13. Would you be willing to share data in exchange for benefits? *

Willing to share

Unwilling to share

Not decided

14. Which different entry mode of open banking into financial

institution will have influence to the people? *

Creating new market

Entering untapped customer segments

Partnership model in payment (Paytm)

15. Are we ready for Open Banking in India? *

Yes

No

Maybe

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● https://ginsep.co/the-concept-of-open-banking-and-its-ap
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payments-sector
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is-enabling-innovations-in-open-banking/
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k/
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yes-bank-says-next-decade-is-for-api-banking-developing
-api-marketplace-for-corporates/79850273
● https://alphabeta.io/blog/details/US/10/open-banking-and
-its-future-in-india
● https://medium.com/apis-and-digital-transformation/are-
open-banking-regulations-an-effective-entry-into-the-api
-economy-98c24502c3ff
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n-traditional-banking/
● https://bfsi.eletsonline.com/open-banking-opening-pathw
ays-for-digital-banking/

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● http://www.businessworld.in/article/Open-Banking-And-
How-It-Is-Poised-To-Transform-Traditional-Banking/14-
04-2019-169077/
● https://thepaypers.com/expert-opinion/evolution-of-open-
banking-in-india--1245956
● How-open-banking-is-catalyzing-payments-change
● https://thedigitalfifth.com/emerging-trends-in-open-bank
ing/
● https://nordicapis.com/6-reasons-for-banks-to-embrace-o
pen-banking/
● https://www.forbes.com/sites/alastairjohnson/2020/11/26/
open-banking-open-risk-how-to-eliminate-fraud-in-the-f
uture-of-finance/?sh=3d49ca306eff
● https://www.law.ox.ac.uk/business-law-blog/blog/2020/10/
adapting-indias-regulatory-framework-digital-only-bank
s-case-reform
● https://www.mastercardservices.com/en/expert-insights/4
-changes-customers-want-their-banks-make-2019

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