Open banking: The rise of the cloud platform

Click the button below to access the full article.

Abstract: This paper explores how traditional banking system architectures will be affected by the emergence of open banking. Platform models for open banking are proposed that accommodate both supply and demand-side solutions. On the demand side, the network effects of open banking platforms and their limitations are discussed. Using a feedback model of platform behaviour, it is suggested that the long-term success of open banking can be directly coupled to the emergence of such platforms and their regulatory scope. To inform the architectures to support open banking, the unique transactional characteristics of open banking solutions are determined. The essential role of cloud technologies in meeting these characteristics and hence the propensity for their use in the implementation of open banking platforms is illustrated. Specific types of open banking platforms are then described in terms of their essential architectural components and collaborations. The benefits to account servicing payment service providers and to third-party providers in adopting such open banking platforms are highlighted.

Keywords: PSD2, open banking, cloud platform, FinTech, banking architecture, BaaS

Gary Farrow is Director of Triari Consulting, a consultancy specialising in regulatory technical consulting and a provider of IT architecture services for the financial sector. Gary has broad experience across multiple financial services domains, specialising in payments systems architecture and cash/liquidity management. His work on payments systems architecture has been published widely. His professional qualifications include Fellow IET, Chartered Engineer and Open Group Master Certified Architect and TOGAF Certification. Gary is a member of the IT Architecture Certification Board for the Open Group. He holds BSc and PhD degrees from Manchester University and is an alumnus of Warwick Business School.