Open Banking- The way we see it
Open Banking is a paradigm shift in the way Banks would deliver financial products to customers along the entire value chain. It’s being fueled by two main pillars API’s and Data. While the term itself has come to be synonymous with an API Economy, the nature of change that it brings goes beyond technology developments, product innovation or regulatory edicts.
Open Banking requires banks to reinvent and reposition their businesses to remain relevant within customer lifestyles and customer journeys. A range of rapidly evolving collaborate-compete business models define the ways of interaction between banks, FinTechs and a wide ecosystem of financial and non-financial partners.
HCL's Novus Open Banking solutions comprise a set of techno-functional frameworks, a well-curated FinTech partner ecosystem, an innovation infrastructure and a depth of engineering and design thinking expertise that help a bank create differentiated Open Banking strategies and implement them.
Business Situation
Open Banking: Opportunities to Seize
Banks or credit unions would invest or develop Open Banking APIs by 2022
Financial institutes believe Open Banking will have greatest impact in next five years
Customers are likely to share personal and account information based on different use cases and age groups
HCL Solution
Lifestyle Banking:
Customers have varying needs from banks based on a specific situation or goals in their lives. Lifestyle banking is about bank's ability to fulfill those individual needs. It's a new paradigm shift in banking services being delivered. From HCL's point of view, it is about re-segmentation of the customers that is based on the lifestyle and needs and not on the products and geography. It will help banks to be more customer-centric organizations and offer a delightful customer experience. In turn, it will improve bank's efficiency and effectiveness. HCL’s Novus Bank IPs and experience driven insights can help to navigate to this new digital future.
Open Banking Aggregation:
Open Banking Aggregation refers to the process in which all account and transaction data for an individual or business are aggregated on a single platform based on customers' consent. Regulations mainly drive this to make banking more transparent and give customers more rights over their data. Today, multiple third parties are providing Open banking aggregation services at a country or regional level. HCL's Novus API Hub provides Open Banking aggregation globally and this is helping large global banks to deliver unique multi-bank PFM/BFM, treasury management (cash pooling, liquidity portal, company accounts, FX settlement, verification of accounts, etc.).
Open Innovation:
Open Innovation is a term coined in 2003 by Prof. Henry Chesbrough, which refers to breaking down the soiled innovation process and making the innovation process more open, transparent, and accessible. Organizations can follow different innovation processes like Inside-out or Outside-in. HCL recommends leveraging the Outside-in approach where banks can collaborate with partners and customers to drive innovation. All the external partners are integrated into the innovation process, and all new products and services are co-created. HCL partners with banks to co-innovate through various engagement models. It will help banks shorten the innovation cycle and bring products faster in the market.
Banking Super App:
A Banking Super App is a native digital integrated platform, offering an entire ecosystem of financial and non-financial hyper-personalized products and services centered around customers' lifestyle needs. It involves integrating third-party services into the bank's ecosystem and leveraging large customer financial and non-financial data sets to design hyper-relevant and personalized experiences and products. From HCL's point of view, the Open Banking revolution will enable banks to connect and integrate with the right partners and offer personalized experiences and services leveraging data. It will help banks improve customer satisfaction, time to market, and customer lifetime value (CLTV) and be more customer centric.
Request to Pay (R2P)
Request to pay with open banking would mean merchants can empower their banks to instantly make and receive payments between their account and customer's accounts. Customers can make payments for products and services directly using their bank account without having any additional payments arrangement. It would reduce costs, fraud, and chargebacks alongside the delivery of better transaction data and the potential that R2P would act as a catalyst for instant payments. HCL, along with its IPs and network of partners, helps banks speed up implementing these various capabilities needed.
Multibank Money Management (PFM, BFM, Treasury):
Multibank money management refers to the solution for people to access bank accounts from different banks in one place enabled by Open Banking. Personal or Business finance management (PFM/BFM) has slowly morphed over the past decade, offering functionality such as account aggregation, automatic transaction categorization, budgeting, goal setting, and forecasting. It will enable banks to share actionable insights with customers, allowing them to manage their finances better. Corporate customers can leverage this to have globally unified view of cash and liquidity and offer advisory banking. Banks will improve customer satisfaction, customer loyalty and gain further market share. HCL, along with its IPs and network of partners, helps banks speed up implementing these various capabilities.
Contextual Banking:
Contextual Banking refers to bank's ability to offer hyper-relevant (hyper personalized) experience across the entire customer journey and tailored products and services based on customers' specific needs and context. It will help banks improve customer satisfaction and customer lifetime value (CLTV) and be more customer centric. From HCL's point of view, banks need to be a constant part of customers' lives, leverage data across the entire customer journey, and embrace new digital and data technologies to add value within any context or channels customers choose to engage with banks. Corporate customers can leverage this to offer contextual and tailored solutions for managing market & liquidity risks. HCL's Novus Bank’s IPs and experience-driven insights help banks to navigate to this new digital future.
Success Stories
Objective:
The client is a leader in digital banking services. HCL is the strategic partner for the bank working in a number of key Open Banking and Digital Banking initiatives, which include Development of 200+ Core Banking APIs, launching a fully digital bank and Mobile banking and wallet app
HCL Solution:
HCL is the strategic partner for the Core Banking API development. The scope of activities includes Business Analysis, API build, Test Automation & SIT, Release Management activities. API’s allowed Key Banking Service/Assets to external World to access which were limited to Bank Application till now. It includes features like:
- Onboarding of new users to Bank.
- View Parties/User’s Information including demographics.
- Sending email and SMS Notification for credit/debit card transactions including OTP.
- View current and historical exchange rates with enablement of FX Watch - also provides for specific input currency pair
- To settle payments electronically to credit cards, loans and other billing organizations authorized by the bank.
- To transfer money to their own account, third-party accounts or external accounts.
- Payee management functionalities such as adding new payees, retrieving payee details, and retrieving registered payee lists
Benefits:
- 90 seconds for Wallet account opening
- Loan request feature with immediate disbursement facility
- 70% quicker release timelines with devops implementation
- Minimized COVID impact by enabling ease of access with Social banking, contactless banking etc
Objective:
The client embarked on their Open Banking journey and wanted to achieve PSD2/CMA9 compliance with a path to adopting new Open Banking business models
HCL Solution:
- The scope of work included Requirement gathering/analysis, Microservices design, development and testing.
- Built system API's to access legacy system & database to expose data in canonical formats. HCL also built connectivity, built integration flows with reusable approach to reuse the logic in & across the integration platform.
- Shift Left Testing’ with a greater focus on automation testing
- Built common error framework, to capture the business/logical errors to handle business requirement across the banking domain
Benefits:
- $1.2 Million Savings with 100% automation in system & performance testing
- 80% Offshoring reduced significant delivery cost
- 95% Automation Testing with ‘Shift Left Testing’ approach
Objective:
The client’s architecture lacked a standard way of representing the business services and did not allow existing systems to connect efficiently with the outside world. Functionalities tightly coupled with the user interface or portal could not be changed even for minor iterations. This led to:
- Inhibited growth had increased maintenance cost
- Continued software maintenance fees for an insignificant amount of ROI
- Missed revenue due to the lack of innovative products
HCL Solution:
HCL and the client decided to engage in a journey to develop a standardized REST API which would integrate with the back end and provide next-gen, customer-centric solutions. For the implementation, HCL used Spring Boot, Rancher for Microservices, API Gateway from Axway, BitBucket for version control, and CA LISA (DevTest solutions) for service virtualization. Our team selected the top software solutions from specific segments on the basis of cost, speed, and ease of implementation. HCL’s API gateways have security and throttling models that impose limitations on who pulls the data, when, and how frequently the data gets pulled.
Benefits:
- The APIfied system is more agile with shorter release cycles and faster time to market. The solution empowered the insurer to cope with unforeseen changes and meet sudden demands in the insurance landscape.
- Enabled data standardization that allowed all subsystems across the organization to adopt and achieve a uniform structure.
- Faster time to market
- Cope with unforeseen changes and meet sudden spikes in demand
- Scalability and optimum usage of infrastructure with no impact on business continuity
Objective:
- Poor customer experience leading to drop out in customer onboarding
- Brand inconsistency due to inorganic growth
- Inability to predict customer churn and customer retention
HCL Solution:
- Redesigned customer journeys to deliver continuous experience across channels through web, campaigns, CRM, self service options. The solution was created to ensure brand consistency across different subsidiaries through content as a service architecture
- Connected with 3rd party applications designed to enhance user experience
- Re-platformed the new digital engagement ecosystem from legacy to the new modern ecosystem on cloud with a record launch of 6000+ experiences on web & mobile in record 3 months
- Enabled Real Time Delivery of Aggregated Information to Investors
Benefits
- Optimized Opex - 20+ Digital Properties - One Cloud Based scalable infrastructure
- Reduced dependency on Call Center by 30%
- 7 Mil AUD approved cost saving
- Time to launch reduced to 60%
- #1 mobile app and online bank in Australia
