The Open Banking mandate in the United Kingdom and the second Payment Services Directive (PSD2) regulation in the EU are meant to increase competition and innovation in the financial system. Financial Services come into force in early 2018 and will set new standards for banks in the areas of strong customer authentication, secure application programming interfaces (APIs) for customer data sharing, and modern customer consent mechanisms.
New customer-centric banking models are poised to transform financial services for the new digital economy. Embodied in the Revised Directive on Payment Services (PSD2) regulation soon to take effect across the European Union, and in the Open Banking mandate that will come into force even sooner in the United Kingdom, these new rules will require banks to give third-party financial services providers direct access to financial data that bank customers – both individuals and businesses- choose to share. While the transition to this new open ecosystem poses a regulatory challenge for banks, it also represents a profound opportunity to create new value for customers, new forms of competitive advantage for banks, and new business models for financial services startups.
To comply with Open Banking and PSD2, and to capitalize on the business opportunities they offer, banks must first address a series of technical requirements around measures including strong customer authentication, secure application programming interfaces (APIs), and customer consent mechanisms. Digital identity management will play an especially important role in this effort, enabling banks to verify customer identity, enforce user consent policies, apply adaptive risk analytics, and support end-to-end security across third-party services. As startup banks, fintechs, and other service providers transform the competitive landscape, digital identity will also help banks deliver the seamless, consistent, and personalized experience customers expect across channels and services.
This is a golden opportunity for banks not only to comply with regulations, but to also position themselves for success in the new era of digital banking. A complete digital identity management platform can help banks to meet new technical demands and also introduce new personalized products and services, strengthen customer relationships, and build the secure banking platform of the future.
Download this white paper to learn how the ForgeRock Identity Platform can address the four main challenges that come with Open Banking and PSD2:
- Securely authenticating customers, employees, partners, and things
- Managing API access to confidential customer data
- Sharing personally identifiable information with customer consent
- Leveraging identity best practices to rapidly deploy in various environments