• Frederik Mennes, Senior Manager Market & Security Strategy, Security Competence Center at OneSpan


• 04.01.2019 09:00 am
undisclosed

One of the most important trends we’ll see in 2019 is the global adoption of Open Banking, especially in the United Kingdom, the European Union and Asia-Pacific (primarily in Singapore, Hong Kong and Australia). Open Banking allows third-party payment service providers (TPPs) to obtain consumer data from banks about financial history, and to initiate payments directly through bank accounts. As such TPPs have the ability to build innovative financial service solutions for consumers and enterprises, such as account aggregation applications and new payment methods, around APIs provided by banks. This should give rise to more diverse payment mechanisms, with lower cost and increased convenience, for users.

In the context of Open Banking, we will see a lot of discussion around the convenience of the authentication process. When the user wants to access a bank account application through the application of a TPP, the user has to be authenticated by the bank, and the authentication flow needs to be integrated into the TPP’s application. The authentication needs to happen in a secure way that is convenient for the user at the same time, otherwise users will not adopt the applications of TPPs. There’s still a lot of discussion between financial institutions, TPPs and regulators about how this authentication can happen, and different approaches (e.g. embedded, redirection, decoupled) are on the table. This discussion will especially take place in the European Union, as financial institutions need to provide Open Banking APIs by September 2019, in line with the timeline set out by the Regulatory Technical Standards of PSD2.