BANKING ECOSYSTEMS
collaboration a significant hurdle for banks to overcome .
While concerns regarding data security , privacy and maintaining regulatory compliance were once paramount for banks , banking ecosystems have flipped this model on its head , necessitating data sharing with third parties .
As such , security models need updating to guard customers ’ data across an entire ecosystem .
Prakash Pattni , Managing Director of Digital Transformation at IBM Cloud for Financial Services , notes : “ In order to connect to an ecosystem , a bank needs to give partners access to its system . Open banking is great , but you really need to be able to do this in a secure way . It can take fintechs and startups 18-24 months to onboard with banks because the bank has to complete due diligence and security checks .”
The status of a bank ’ s legacy technology can , therefore , have a significant bearing on its willingness to join an ecosystem . As noted by Payoneer ’ s SVP for Europe , James Allum : “ The fundamental challenge will be whether a bank ’ s in-house technology can support the development of a digital platform that allows the onboarding of partners and accounts , while addressing associated security concerns around data sharing and privacy .”
The difficulties legacy banks face , which predominantly need to overhaul their existing tech , is why Allum sees banks with a small geographical focus , featuring products “ defined to meet local needs ”, as more readily adapted to integrate into broader ecosystems . They typically have smaller tech stacks , less customer data and a greater will to integrate into a wider ecosystem to meet their growth aims .
“WE ’ RE ALREADY SEEING BANKS MOVING EVERYTHING TO THE CLOUD , IT ’ S JUST A LONG AND COSTLY PROCESS ”
PRAKASH PATTNI MANAGING DIRECTOR OF DIGITAL TRANSFORMATION , IBM CLOUD FOR FINANCIAL SERVICES
52 August 2023