CGI is helping ‘Open Banking’ customers to benefit by allowing third parties to access finances

FROM the days of marking up bank books and having stern face-to face meetings with the manager, to instantly transferring funds in seconds by mobile phone, we need to feel that banks are looking after our hard-earned money.

As Sean Devaney, Vice President of Strategy, Banking & Financial Markets at CGI, explains, the message of how we can now open our bank accounts to outside parties needs to be delivered more clearly.

It’s called Open Banking and, as Sean explains, it was developed as the result of a decision by the Competition and Markets Authority (CMA). It decided that banks didn’t provide a level-enough playing field for competitors to come into the marketplace and innovate.

So, in conjunction with European legislation, the CMA said banks had to develop a set of services that allowed third parties to access account information. That would mean they could get information on an account and make customer payments on their behalf, obviously with permission.

“People are not familiar with the idea and sometimes there’s a nervousness about it, and that’s understandable,” says Sean. “For the past 10 years, it seems we’ve been told on a daily basis not to reveal our account details to anyone – and now banks are saying it’s safe to let these third parties have access.

“Open Banking is a service that was provided initially by the nine largest banks – by number of account holders – in the UK.

“That allowed fintech providers, so third parties such as your insurance company, your gas company, or the likes of Amazon or PayPal to, with your permission, access account information, download statement information or make payments on your behalf.”

Sean points out that this access is different to something that has been known as “screen scraping”. With access to accounts, these companies would take a picture of the screen and then gather information from that.

“There have been various companies carrying this out. They would require you to provide them with your username and password to one or more accounts and then they would provide you with the service. Even though that service was coming from a legitimate provider, in reality it was providing unfettered access to your bank account. Had there been a security breach it would be a worry because you’d be giving them access across all of your accounts. The only way to stop access would be to change your password.”

There were clearly trust issues with the banking system following the 2008 financial crash, but as Sean points out, the trust that banks can carry out transactions has not been depleted. In fact, we are demanding more from banks. From the generation who clung to their bank books and visited a branch to meet the manager, we are now in a position where banking is almost completely faceless and any transaction that can’t happen in real-time is seen as a real inconvenience.

Sean explains how Open Banking formalises that third-party access to our accounts: “To get access to any of your information you have to give explicit permission. 

“You are allowing this particular third party to access this particular account for a particular purpose for this length of time. It’s much more controlled and security around it is much more robust. 

“You can provide access to a very specific amount of data and for a very specific amount of time. The idea is the banks can provide much more innovative products to the customers. 

“For example, there are companies who offer mobile services. If you buy a coffee with their app, they will round up the price and then place the extra funds in an ISA for you. They’re providing what could be a valuable and innovative service, but it’s very much done through this open banking process.

“If you look at the largest tech companies in the world at the moment, such as Amazon and Uber, they are all providers of platforms where other services can be added.”

That’s where CGI sees a number of its banking clients moving, using banking as a platform. “Banks have never actually made anything – all they were doing was facilitating other people doing things – so banking logically lends itself to being a platform offering. Banks have traditionally done everything in-house, but what we see is banking looking out for best-of-breed providers, then working out how they integrate.”

These services require that connectivity inside the bank, so CGI has developed an offering called Open Finance, which allows banks to have connections into all these external services, in a way that is fully documented with a robust interface.

“The banks themselves don’t have to develop those services,” adds Sean. “They can pull in services from outside the organisation using our Open Finance service and connect into the core transaction process. 

“Our service allows banks to coordinate and manage how they connect to all these other services so they can offer their customers a much more seamless and wide-ranging set of services.”