Search

The introduction of Big Data technology into banking activities is aimed at improving the efficiency of banks, improving business processes, however, it creates new risk factors and determines the need to transform regulatory approaches. The purpose of the article is to develop recommendations on the use of Big Data technology in banking, including the bank transactions using a financial platform, taking into account the need to ensure the stability of the banking sector at the macro and micro levels, and the development of the financial market. It has been established that Big Data technology is used in the management of banking risks, in the development of relationships with customers, the development of personalized products; in cost reduction. The use of Big Data defines new requirements for staff competencies. As a result of the analysis, the need for cooperation between banks, operators of financial platforms with specialized providers of cloud services, software, as well as fintech companies is substantiated. It was revealed that the implementation of Big Data technology increases the importance of model, reputational risks, third-party risks, unethical behavior, and cybersecurity. When using Big Data technology, banks are recommended to separate the data management function; the regulator — to expand the regulatory principles and approaches to the use of data in the construction, validation, adjustment of banking models based on Big Data technology, to the exchange of data and their protection, to the use by banks, operators of financial platforms of Open data, to the certification of specialized suppliers, interacting with banks; the legislator is recommended to develop a legal framework that regulates the formation and use of open data by economic agents.

This article examines key recent developments in payment services regulation in the UK and EU. In addition to proposals to reform traditional payment services legislation, it also considers proposals to regulate crypto-assets when used as a means of payment and proposals to regulate buy-now-paylater agreements, as these are increasingly offered by merchants as a means of payment. Both the UK and EU have proposed broader regulation of crypto-assets, but this article considers only those aspects of the proposals with the greatest relevance to payment services. [ABSTRACT FROM AUTHOR]

Open finance is evolving and extending open banking. This creates a large context that implies a financial and identity data exchange paradigm, which faces challenges to balance customer experience, security, and the self-control over personal identity information. We propose Self-Sovereign Banking Identity (SSBI), a Blockchain-based self-sovereign identity (SSI) to secure private data sharing by utilizing trusted customer's banking cards as a key storage and identity transaction-signing enclave. The design and implementation of the SSI framework is based on the Veramo SDK and Ethereum to overcome the limitation of signing curve availability on the current banking Java Cards needed for Hyperledger Indy. SSBI uses the elliptic curve SECP256K1 for transaction signing, which exists for several payment cards in the market. SSBI enables automated financial services and trust in the service provider communication. This work analyzes the flow and framework components, and evaluates the usability, integration, and performance in terms of throughput, latency, security, and complexity. Furthermore, the proposed approach is compared with related solutions. The presented prototype implementation is based on a test Ethereum network and signing transactions on the banking card. The preliminary results show that SSBI provides an effective solution for integrating the customer's banking cards to secure open banking identity exchange. Furthermore, it allows the integration of several scenarios to support trusted open banking. The Blockchain layer settings need to be scaled and improved before real-world implementation. [ABSTRACT FROM AUTHOR]

Consent management is most critical part of open banking. Customers, banks, third party service providers, regulators are various parties involved into this process. The recent data shows that open banking has not been greatly accepted yet by customers to the fullest capability. Recent surveys conducted on usage of open banking indicates the discomfort in customer mind about data sharing. Blockchain based framework implementation can bring the required transparency into the consent management process. To achieve that Blockchain technology needs to be embraced by banks and Third party providers (TPPs) to provide customers the open banking services in transparent manner. A blockchain based framework which can be easily integrated into banks' existing technology landscape thus becomes need of the hour. Consortium permissioned blockchain based framework implemented in Corda is suggested in this paper which addresses challenges faced by customers and it tracks data sharing violation for communicating to customers. Data sharing between bank and TPPs happen as node to node transaction and regulatory bodies can have tracking of every such transactions as owner of Notary node. Based on the legal contract between bank and TPP, framework compares and finds out in real time if any data sharing violation happening. Real-time tracking of data sharing violation and communication to customer provides transparency into the framework which will boost customer confidence and trust into the system. Regulatory bodies need to actively own this part to share information with customers about the data handling if there is any violation. [ABSTRACT FROM AUTHOR]

Open banking is one of the main transformational levers to improve competitiveness in retail banking by enabling client data sharing with third-party providers. This study enhances the traditional Technology Acceptance Model (TAM) constructs with two additional factors, initial trust and social influence, to understand clients' behavioral intention to adopt open banking. The study analyzes a sample of 553 surveys in Spain, a country with an established open banking regulation (European Union's Second Payment Services Directive). The proposed model showed robust explanatory capacity (R² = 85%). Results show that perceived usefulness, social influence, and initial trust are essential in determining the behavioral intention to embrace open banking. Nevertheless, perceived ease of use plays a minor role, an outcome aligned with current fintech adoption literature. Our study implies that private agents should focus on highlighting the benefits of open banking while policymakers should work on regulatory frameworks to increase clients' initial confidence. [ABSTRACT FROM AUTHOR]

This study aims to shed light on a very important topic represented in open banking. In order to achieve the objective of the research, the study focused on the concept of open banking, as it dealt with all aspects related to open banking services, as well as the challenges facing this banking system, and at the same time exposed to the opportunities it offers. The results of the study showed that the adoption of open banking services in the financial and banking transactions of banks works to achieve their strategic objectives by adopting the principle of open innovation in providing services, and enhancing opportunities for developing new financial products and services at the lowest cost to enhance financial inclusion for groups of society, and increase competitiveness and thus efficiency of the banking sector. That is why we must work to stimulate competition and adopt innovation by encouraging the entry of financial technology companies. [ABSTRACT FROM AUTHOR]

Predicting creditworthiness is an important task in the banking industry, as it allows banks to make informed lending decisions and manage risk. In this paper, we investigate the performance of two different deep learning credit scoring models developed on the textual descriptions of customer transactions available from open banking APIs. The first model is a deep learning model trained from scratch, while the second model uses transfer learning with a multilingual BERT model. We evaluate the predictive performance of these models using the area under the receiver operating characteristic curve (AUC) and Brier score. We find that a deep learning model trained from scratch outperforms a BERT transformer model finetuned on the same data. Furthermore, we find that SHAP can be used to explain such models both on a global level and for explaining rejections of actual applications. [ABSTRACT FROM AUTHOR]

Abstract The coupling of data and digital innovation opens the way for new business in the financial services sector, where customers are placed at the centre of decisions and data can help to develop customer knowledge. To carry out our research, we adopted a multi-case study approach to explore how a data strategy is developed in the retail banking industry, together with its relationship with customer value, paying particular attention to the heterogeneity between traditional banks and financial technology companies (FinTechs). Two main points emerged from the study. Firstly, there are three possible approaches to Open Finance, which are mainly defined by their different corporate cultures, organisational configurations, technological architecture and data value. Secondly, it is not enough to be a FinTech to be best placed to exploit the market, as some traditional banks share the FinTechs’ approach to Open Finance. Designing new tailored products, customising their prices and offering them over the right channels through targeted communication are all data-driven initiatives that stem from cross- or up-selling potential, core to the retail banking industry for turning a customer into a cash flow, thus enabling value to be created for customers. Our findings additionally revealed that there is a form of external information asymmetry between the customer and the bank, and that there is also an internal asymmetry between bank departments, as their visibility on information about the same customer may differ.

Human life today is intertwined with abundant trade and economic exchanges, and life would not be possible without trade and commerce. One of the main pillars of financial exchanges are banks and financial and credit institutions, which, as the vital arteries of the economy, are responsible for transferring funds and keeping the economy alive. In the world of economic competition between organizations, profitability and proper performance for stakeholders are the basic principles of the organization's survival. To increase profitability, banks must take measures that, in addition to reducing costs, increase the level of service and customer satisfaction. The best way to do this is to use new technologies and orient the bank's policies to provide services in person and independent of time and place. The use of new technologies in the banking system sometimes leads to customers' distrust and distrust of the bank. Therefore, solutions to detect fraud in banking transactions should be provided. This article aims to discover a model for face-to-face transactions and to establish a system to block fraudulently issued transactions. Therefore, a big data clustering method is designed to timely identify bribery in banking transactions. The results show that using the big data clustering method in the fastest time can detect and stop possible fraud in customers' banking transactions.

Open banking (OB) creates an opportunity for financial institutions to offer more personalised services by better differentiating between a specific customer (reference subject) and similar customers (comparison group). We propose the time-varying comparative mean value as a statistical method that learns about the dynamics governing how the response of a reference subject differs from that of a comparison group, defined via covariate truncation. The proposed model can be regarded as a time-varying truncated covariate regression model of which a smooth version is devised by resorting to local polynomial regression. The simulation study suggests that our estimators accurately recover the true time-varying comparative mean value in a variety of scenarios. We showcase our methods using OB-type data from a financial service provider in the UK, with the dataset containing detailed information on customers' accounts across 70 UK financial institutions. By contrasting a specific customer against similar customers, our method offers interesting diagnostics that can be used by financial institutions to recommend personalised services. [ABSTRACT FROM AUTHOR]

In current Open Banking services, the European Payment Services Directive (PSD2) allows the secure collection of bank customer information, on their behalf and with their consent, to analyze their financial status and needs. The PSD2 directive has lead to a massive number of daily transactions between Fintech entities which require the automatic management of the data involved, generally coming from multiple and heterogeneous sources and formats. In this context, one of the main challenges lies in defining and implementing common data integration schemes to easily merge them into knowledge-base repositories, hence allowing data reconciliation and sophisticated analysis. In this sense, Semantic Web technologies constitute a suitable framework for the semantic integration of data that makes linking with external sources possible and enhances systematic querying. With this motivation, an ontology approach is proposed in this work to operate as a semantic data mediator in real-world open banking operations. According to semantic reconciliation mechanisms, the underpinning knowledge graph is populated with data involved in PSD2 open banking transactions, which are aligned with information from invoices. A series of semantic rules is defined in this work to show how the financial solvency classification of client entities and transaction concept suggestions can be inferred from the proposed semantic model. [ABSTRACT FROM AUTHOR]

The emergence of financial technology companies (fintechs) has spurred expectations that they will lead to large-scale disintermediation in finance and significantly disrupt the banking industry. Regulators in several jurisdictions have supported their market entry through the adoption of open banking policies, whose purpose is to facilitate third-party access to banking data, subject to customer consent. Data access has been seen as a competitive bottleneck in the banking industry, while customers hold the ultimate ownership over their data. This paper aims to critically assess proclaimed promises of open banking by analysing existing barriers to entry and market-based collaborations between banks and fintechs as identified in the literature. Since the expected effects can vary depending on the regulatory model embraced, the paper also outlines the economic trade-offs of different regulatory solutions. Consequently, the paper may help regulators who are considering introducing or designing open banking policies. [ABSTRACT FROM AUTHOR]

Globalisation, technological advances, liberalisation of financial markets, and changing consumer behaviour are transforming banking profoundly. Under the EU Payment Services Directive 2 (PSD2), incumbent banks must open up their data, processes, and business functionalities to customers and third parties including rivals. It is critical to understand consumer behaviour post-PSD2, and the potential impact of PSD2 on the functioning of the retail banking and financial services market. In this preliminary study of 244 consumers from six European countries, we explore the role of social influence, facilitating conditions, perceived risk, and effort and performance expectancy in order to unravel the determinants of consumers’ acceptance of account information services (AIS) as provisioned under PSD2, which provide consolidated bank account information for consumers with multiple bank accounts across multiple banking institutions. Our findings suggest that the competing influences of (a) positive perceptions such as social influence, facilitating conditions, and performance expectancy, and (b) negative perceptions related to risk, sway consumers’ intentions to adopt AIS.

Banks are generally prohibited in any possible way from providing customers’ data or information to third parties unless there is a written consent from the customer, or it is required by laws or regulations. Open banking allows banks to obtain customer financial data and information and forward them to third parties to accelerate a digital transformation in banking. The existence of the customer’s consent resulted in the bank’s legal action providing customer data and information to a third party is not considered as a violation to the principle of confidentiality. However, the provision of customer data by banks to third parties must be based on the fiduciary principle, prudential principle, and principle of amanah, since the misuse of customers’ data can lead to administrative sanctions, criminal sanctions, and civil liability.

This study investigates the foundations underpinning open banking models in Europe and identifies levers to improve their performance. Based on a review of the literature, it distinguishes four contexts for open banking: platformisation, data sharing, FinTech and regulation. The users of open banking services are surveyed to determine factors driving adoption and identify those entities that customers trust with their data and funds. The results indicate that the slow adoption of open banking services is in large part due to customers' poor understanding of such services. The results also show the importance of usefulness and trust in driving adoption. These findings highlight the disproportionate attention being given to service provider infrastructure and the ecosystems of new entrants, and indicate that more consideration should be given to the actual users of open banking frameworks. In response to the findings, the study proposes a roadmap to mitigate the main weaknesses in current open banking models. The conclusions of this study are relevant not only to the development of open banking regulations in other territories, such as the USA and Canada, but also to the extension of data-sharing regulations to non-banking sectors. [ABSTRACT FROM AUTHOR]

This paper discusses the results of the Global Open Banking Report, released by CBI and PricewaterhouseCoopers in December 2021. Starting with a brief review of the current state of open banking at the global level, the paper switches focus to the European scenario and on the Italian market in particular, highlighting the disruptive nature of open banking, and its potential for significant growth. The study finds that although open banking is still in a development phase in Italy, banks and other players are constantly exploring collaborative initiatives and investing in innovative services that go beyond the traditional banking sector, marking a transition from open banking towards open finance. [ABSTRACT FROM AUTHOR]

Banks generally use credit scoring models to assess the creditworthiness of customers when they apply for loans or credit. These models perform significantly worse when used on potential new customers than existing customers, due to the lack of financial behavioral data for new bank customers. Access to such data could therefore increase banks' profitability when recruiting new customers. If allowed by the customer, Open Banking APIs can provide access to balances and transactions from the past 90 days before the score date. In this study, we compare the performance of conventional application credit scoring models currently in use by a Norwegian bank with a deep learning model trained solely on transaction data available through Open Banking APIs. We evaluate the performance in terms of the AUC and Brier score and find that the models based on Open Banking data alone are surprisingly effective in predicting default compared to the conventional credit scoring models. Furthermore, an ensemble model trained on both traditional credit scoring data and features extracted from the deep learning model further outperforms the conventional application credit scoring model for new customers and narrows the performance gap between application credit scoring models for existing and new customers. Therefore, we argue that banks can increase their profitability by utilizing data available through Open Banking APIs when recruiting new customers. [ABSTRACT FROM AUTHOR]

The purpose of this paper is to present the two existing virtual account models functioning in the European Union, examine their legal validity and identify the legal challenges related to the functioning of these models. The first model, Mass Payment Accounts, which is related to virtual accounts rather than to virtual IBANs, is the model where the licensed financial institution only provides a business payment (settlement) account, with technical subaccounts, to one of their business clients. The functionality of the subaccounts is limited to reflect and distinguish the incoming payments. The second and more complex model is the vIBAN solution, where the licensed payment institution provides, to another licensed financial institution, indirect access to local payment schemes (hereinafter referred to as "vIBAN"). To confirm the legal validity and identify the potential risks of vIBAN services, EU law was analysed with some insights from Polish law. The reason for introducing vIBAN services is the difficulty for certain payment service providers to participate in so-called designated payment systems. Designated payment systems are usually the most widespread local payment systems. The reason for the different treatment of these designated systems is banking systemic risk, understood as a situation where a default by a system participant may result in a default by other participants. Consequently, even if a given payment service provider can obtain its own IBAN number, there is often no possibility for it to participate in designated payment schemes. Bearing in mind the different rules in the case of designated payment systems, the legality of vIBAN services in the EU law is justified by the principle of free movement of services, the principle of equal access to payment schemes and the obligation of the credit institutions to provide banking and non-banking participants with credit institution payment account services on an objective, non-discriminatory and proportionate basis. However, there are various challenges related to the functioning of vIBAN services, such as the overlapping of certain AML/CFT obligations, enforcement of administrative and court seizures, AML-related blocking of vIBANs and consistency of money transfer sender data with the Fund Transfer Regulation. The most pressing challenges requiring prompt regulation on the European level are related to the applicable deposit protection scheme, as well as to specific Member States' administrative restrictions, which can cause difficulties in offering vIBAN services to business entities. [ABSTRACT FROM AUTHOR]

Open Banking allows consumers to take advantage of data-driven financial services by sharing data held at one organization with another organization, typically between financial institutions and trusted third parties. Open Banking is consumer controlled, secure, and protects privacy. These new services represent an innovative and growing market. Clear and fair rules, industry coordination, and technical standards are needed to avoid fragmentation and to build a robust market that serves all consumers and Small and Medium Enterprises (SMEs). International developments in jurisdictions such as the UK and Australia have demonstrated the expected benefits that Open Banking can deliver to consumers. The challenge to governments in North America is to adopt a consistent framework that provides the security and protections consumers need while at the same time providing flexibility for innovation and streamlining of banking services using the Open Banking model. A key question for implementation of Open Banking will be the balance of activity and involvement between government and the private sector. An unbalanced Open Banking model will likely fail; a balanced Open Banking model can bring tremendous value to society. This teaching case asks students to first understand the benefits and challenges of Open Banking for many stakeholders, and then to recommend on how to proceed (or not) with implementation. The case is written from a North American perspective, that is, the USA and Canada. [ABSTRACT FROM AUTHOR]

This article explores the potential risks to consumers when paying for goods online using open banking (an emerging payment technology) vis-á-vis cards. While comparable (andat times, enhanced) consumer protection exists, there are gaps in protection which UK legislation and/or the card rules offer. The article then seeks to address these gaps with a blended, regulated and market-driven approach. [ABSTRACT FROM AUTHOR]

Goal: To provide an overview of the implementation of Open Banking in Brazil from the perspectives of financial sector professionals and specialists. Design / Methodology / Approach: A systematic literature review was conducted on three databases: Scopus, Web of Science, and BDTD. This led to the selection of 15 articles discussing the implementation of Open Banking in Brazil based on key variables from international literature. Questionnaires were used to investigate divergences and additions to the theoretical findings among a group of 150 specialists. The results obtained in the questionnaire were analyzed through the application of multivariate statistical techniques, in addition to qualitative techniques. Practical Implications: The main benefits and difficulties faced by countries that have already experienced Open Banking implementation were identified. The perception of respondents from different groups was investigated regarding the implementation of this system in Brazil and potential business models stemming from this phenomenon. Thus, this study offers an overview of Open Banking implementation in Brazil from the perspectives of financial sector specialists. Originality / Value: The overview of Open Banking implementation in the Brazilian banking sector is highly connected to investments in technology. This process has been disruptive, requiring banks to adopt a client-centric strategy instead of one based on products and services. As for the regulatory aspects, despite the country possessing a favorable environment for the development of new products and services stemming from Open Banking, banks are facing challenges to fulfill the implementation schedule established by the Brazilian Central Bank. [ABSTRACT FROM AUTHOR]

Shortly after the first financial crisis of globalization (2008-2009), a number of changes started to dominate the financial and banking world. Households and companies were confronted with a series of new rules and procedures aimed at protecting both the banks and the public. In most cases they led to an increase of the lending cost, and new requirements for money laundering avoidance and prevention of terrorist financing made access to money onerous and hungry for paper. Technology and AI brought an alternative to the market, which proved to be faster, cheaper and with less hurdles. They are all private initiatives, spun up by startups and the wisdom of putting IT knowledge to the service of young entrepreneurs. The crypto assets, blockchain, fintech, digital payments and digital currencies are all part of the new developments. The emergence of technology as the new layout for banking led major financial powers and the international financial institutions to look closer at the challenges they face, and decide that the launch of an official digital currency should not be postponed for too long. Currently, more than 70 central banks of the world are engaged in the process of preparing for the near future, among which ECB is a front runner.

[Propósito] O estudo busca analisar em que medida o modelo regulatório de implementação do Sistema Financeiro Aberto supera as estratégias tradicionais de comando e controle e utiliza mecanismos mais compatíveis com métodos de regulação por incentivo, que buscam a adoção de mecanismos de coerção interna para efetivação de preceitos de interesse público. [Metodologia/abordagem/design] Pretende-se realizar um estudo de caso, avaliando as disposições normativas referentes à implementação do Open Banking publicadas pela autoridade reguladora do Sistema Financeiro Nacional, a fim de identificar confluências entre a estratégia regulatória adotada e o método de regulação por incentivos. [Resultados] A análise revela a adoção pelo regulador de uma estratégia regulatória que supera a simples adoção de modelos de comando e controle e indica a preocupação de criação de um sistema regulatório mais próximo das práticas dos agentes de mercado. [Implicações práticas] O trabalho fornece subsídios para a própria compreensão da regulação relativa à implementação do Open Banking, além de permitir uma leitura teórica sobre as estratégias regulatórias adotadas no Sistema Financeiro Brasileiro.

Financial stability is a key challenge for individuals with mental illnesses. Symptomatic periods often manifest in poor financial decision-making including compulsive spending and risky behaviors. This article explores research opportunities and challenges in developing financial technologies (FinTech) to support individuals with mental health. Specifically, we focus on how objective financial data might lead to novel mental health assessment and intervention methods. We have used data from one individual with bipolar disorder (BD) (i.e., an N = 1 case study) to illustrate feasibility of collecting and analyzing objective financial data alongside mental health factors. While we have not found statistically significant trends nor our findings are generalizable beyond this case, our approach provides an insight into the potential of using objective financial data to identify early warning signs and thereby, enable preemptive care for individuals with serious mental illnesses. We have also identified challenges of accessing objective financial data. The paper outlines what data is currently available, what can be done with it, and what factors to consider when working with financial data. We have also explored future directions for developing interventions to support financial well-being and stability. Furthermore, we have described the technical, ethical, and equity challenges for financial data-driven assessments and intervention methods, as well as provided a broad research agenda to address these challenges.

Goal: To provide an overview of the implementation of Open Banking in Brazil from the perspectives of financial sector professionals and specialists. Design / Methodology / Approach: A systematic literature review was conducted on three databases: Scopus, Web of Science, and BDTD. This led to the selection of 15 articles discussing the implementation of Open Banking in Brazil based on key variables from international literature. Questionnaires were used to investigate divergences and additions to the theoretical findings among a group of 150 specialists. The results obtained in the questionnaire were analyzed through the application of multivariate statistical techniques, in addition to qualitative techniques. Practical Implications: The main benefits and difficulties faced by countries that have already experienced Open Banking implementation were identified. The perception of respondents from different groups was investigated regarding the implementation of this system in Brazil and potential business models stemming from this phenomenon. Thus, this study offers an overview of Open Banking implementation in Brazil from the perspectives of financial sector specialists. Originality / Value: The overview of Open Banking implementation in the Brazilian banking sector is highly connected to investments in technology. This process has been disruptive, requiring banks to adopt a client-centric strategy instead of one based on products and services. As for the regulatory aspects, despite the country possessing a favorable environment for the development of new products and services stemming from Open Banking, banks are facing challenges to fulfill the implementation schedule established by the Brazilian Central Bank.

A significant new data right has emerged in Australia against the background of the opening the economy to new types of third‐party providers (TPPs) and allowing them to have lawful access to consumer banking, transaction, and other financial data held by banks and other institutions. This is done by using application programming interfaces (APIs) that enable networking of customer data and payments across institutions and providers. The developments in Australia are notable for two reasons. First, Australia is standardizing sharing of data and services through the opening and integration of traditional systems, beginning with Open Banking, and next extending to the energy and telecommunications sectors , and eventually economy‐wide. Second, Australia has established a rights‐based approach that is founded on a newly created data right, the Consumer Data Right (CDR) that applies to both individuals and businesses. This article examines the Australian CDR approach to Open Banking and contrasts it with the more widely adopted E.U. Open Banking model especially as it related to consumer consent. This article is categorized under:Jurisprudence and Regulatory Oversight > Communication Across Science and Law [ABSTRACT FROM AUTHOR]

Human life today is intertwined with abundant trade and economic exchanges, and life would not be possible without trade and commerce. One of the main pillars of financial exchanges are banks and financial and credit institutions, which, as the vital arteries of the economy, are responsible for transferring funds and keeping the economy alive. In the world of economic competition between organizations, profitability and proper performance for stakeholders are the basic principles of the organization's survival. To increase profitability, banks must take measures that, in addition to reducing costs, increase the level of service and customer satisfaction. The best way to do this is to use new technologies and orient the bank's policies to provide services in person and independent of time and place. The use of new technologies in the banking system sometimes leads to customers' distrust and distrust of the bank. Therefore, solutions to detect fraud in banking transactions should be provided. This article aims to discover a model for face-to-face transactions and to establish a system to block fraudulently issued transactions. Therefore, a big data clustering method is designed to timely identify bribery in banking transactions. The results show that using the big data clustering method in the fastest time can detect and stop possible fraud in customers' banking transactions. [ABSTRACT FROM AUTHOR]

The finance supply chain has always been a different supply chain compared to product supply chain being a service supply chain. Open Banking (OB) is one of the most important milestones since the beginning of financial technology innovation and service supply chain. As these are activities provided by traditional banks, non-bank financial institutions also provide financial service with access to consumer banking, transactional and other financial data to develop financial applications and services tailored to their customers. The development of financial technology, "Open banking", promotes financial services to begin this transformation. However, evaluating and selecting open banking business partners from multiple perspectives for banks are underexplored. Thus, the authors in this research proposed a hybridmulticriteria decision-making model which includes a Spherical Fuzzy Analytical Hierarchy Process (SF-AHP) model and a Multi-Attributive Ideal-Real Comparative Analysis (MAIRCA) model with supports from seasoned domain experts. The contribution of this research is a proposition of a fuzzy decision model for evaluating and selecting open banking business partners. The model successfully determined a suitable open bank provider in order to assist decision makers decide objectively. [ABSTRACT FROM AUTHOR]

The coupling of data and digital innovation opens the way for new business in the financial services sector, where customers are placed at the centre of decisions and data can help to develop customer knowledge. To carry out our research, we adopted a multi-case study approach to explore how a data strategy is developed in the retail banking industry, together with its relationship with customer value, paying particular attention to the heterogeneity between traditional banks and financial technology companies (FinTechs). Two main points emerged from the study. Firstly, there are three possible approaches to Open Finance, which are mainly defined by their different corporate cultures, organisational configurations, technological architecture and data value. Secondly, it is not enough to be a FinTech to be best placed to exploit the market, as some traditional banks share the FinTechs' approach to Open Finance. Designing new tailored products, customising their prices and offering them over the right channels through targeted communication are all data-driven initiatives that stem from cross- or up-selling potential, core to the retail banking industry for turning a customer into a cash flow, thus enabling value to be created for customers. Our findings additionally revealed that there is a form of external information asymmetry between the customer and the bank, and that there is also an internal asymmetry between bank departments, as their visibility on information about the same customer may differ. [ABSTRACT FROM AUTHOR]

The implementation of open banking has revolutionized the financial services landscape, enabling data sharing and collaboration among financial institutions, fintechs, and third-party providers. While promoting financial inclusion and fostering innovation and competition, open banking presents inherent risks that necessitate identification and mitigation for sustainable growth. To promote financial inclusion and prevent fraud, establishing digital identities and proper customer identification, including biometric measures, is crucial. However, the complexity of European legislation on authentication and transaction security necessitates unified global standards. A comprehensive risk mitigation framework must encompass robust security measures, thirdparty due diligence, continuous monitoring, best practices, and effective incident response plans. Transparent customer consent and awareness are also vital for secure open banking implementations. Collaborative efforts among stakeholders and strong regulatory oversight are necessary to navigate open banking's long-term implications, including cross-border collaboration and global data sharing through harmonized regulatory frameworks. By adopting these measures and fostering collaborative efforts, financial institutions can effectively manage risks and ensure the sustainable development of open banking initiatives, advancing financial inclusion and bolstering the interconnected digital economy. [ABSTRACT FROM AUTHOR]

Copyright of Exacta is the property of Exacta - Engenharia de Producao and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

O presente artigo versa sobre a adaptação pelas instituições financeiras brasileiras à Lei Geral de Proteção de Dados (nº 13.709/2018), analisando os principais desafios à sua implementação no segmento. Ainda, o estudo possui o escopo de identificar os riscos legais apontados pela doutrina e pelos relatórios técnicos em segurança da informação à proteção dos dados pessoais, principalmente com o advento das novas tecnologias utilizadas pelo setor, como também verificar possível relação conflituosa entre a proteção de dados ora normatizada e a legislação regulatória atinente aos bancos. Por fim, será investigada a dicotomia entre o desenvolvimento da economia de dados e a necessidade de proteção aos dados pessoais do consumidor bancário.

The banking paradigm is being transformed because users have changed. They need a new model of service: timely, efficient, profitable and effortless. Banks should be prepared to disclose their data to partners (fintech companies, IT developers, retail chains) using standardized and open application programming interfaces (API). They must also be prepared to connect to new industry platforms, where they act as participants rather than owners of experience and customer relationships. Such a comprehensive transformation takes long time and is determined by the bank’s risk appetite and readiness to digital business. There are classification and main relationships between the terms that denote promising areas of modern banking (Lifestyle-banking, Behavioral banking, Bank-as-a-Service, Open banking, Omnichannel banking, White label banking, Neobanks). It is determined that the concepts of Lifestyle-banking and Behavioral banking are close, but the latter is aimed at the formation of rational financial behavior, which creates a conflict of interests, as financial culture begins to excite the classic bank only when large loan arrears. Omnichannel is an additional characteristic of Lifestyle and Behavioral banks, and all of them are impossible without Open banking. The substructure of Open Banking is the concepts of BaaS and White label banking. To speed up interaction between different stakeholders, Open Banking is based on an API that traditional banks have avoided for security reasons. PSD2 has been introduced as the legal basis for opening bank data of customers with their permission to authorized third-party suppliers. Trends in rethinking banking: digitization of all elements of the banking business; focus on customer needs; cooperation with fintech companies to stimulate innovations; creation of a standardized structure for exchange of banking data through API; abstraction from the peculiarities of each banking system; development of intuitive banking operations; transition to component architectures or modular structures to facilitate and accelerate the development of new services and channels; increasing the level of consumer protection. A comparative characterization of what the banking revolution can give to society as a whole and to each client individually, and the risks that we must be aware of, is given. It is determined what modern banks need to do to increase their competitiveness: review their strategic goals and place more emphasis on consumer experience; use the accumulated analytics for individualized customer service, which will increase profitability; develop a clear and flexible management structure that easily adapts to the changing business environment, provides coherence, adaptability, speed and reliability throughout the ecosystem to turn business components into interchangeable and reusable assembly units of processes or services; identify key indicators, regularly measure them and compile reports, structuring business relationships.

Open finance is evolving and extending open banking. This creates a large context that implies a financial and identity data exchange paradigm, which faces challenges to balance customer experience, security, and the self-control over personal identity information. We propose Self-Sovereign Banking Identity (SSBI), a Blockchain-based self-sovereign identity (SSI) to secure private data sharing by utilizing trusted customer’s banking cards as a key storage and identity transaction-signing enclave. The design and implementation of the SSI framework is based on the Veramo SDK and Ethereum to overcome the limitation of signing curve availability on the current banking Java Cards needed for Hyperledger Indy. SSBI uses the elliptic curve SECP256K1 for transaction signing, which exists for several payment cards in the market. SSBI enables automated financial services and trust in the service provider communication. This work analyzes the flow and framework components, and evaluates the usability, integration, and performance in terms of throughput, latency, security, and complexity. Furthermore, the proposed approach is compared with related solutions. The presented prototype implementation is based on a test Ethereum network and signing transactions on the banking card. The preliminary results show that SSBI provides an effective solution for integrating the customer’s banking cards to secure open banking identity exchange. Furthermore, it allows the integration of several scenarios to support trusted open banking. The Blockchain layer settings need to be scaled and improved before real-world implementation.