By Bruno Cambounet, VP Go-To-Market FSI Program, Axway

Over the past decade the digitalisation of the financial industry has led to significant improvements in employee productivity, has empowered workforces and improved customer services. Staff have better access to information, applications and transactional intelligence from anywhere, including their own tablets and mobile devices. But now the challenge is to manage data outside the four walls of the office. Financial institutions need to ensure they have an eye on data as it’s accessed by customers’ mobiles, partner organisations, international banks or industry bodies.

In an ever changing regulatory landscape, however, financial organisations need to stay ahead of newly instituted rules and standards, minimising the costs and disruption along the compliance process. As EU regulatory laws such as the Single Euro Payments Area (SEPA) and the Payment Services Directive (PSD) come into play this year, this will lead to the creation of an EU-wide single market for payments, and the quality of banking services will come to the fore. Financial organisations will be expected to face further checks, particularly in terms of bank transfer transparency and security. This means that quick access to data can prove crucial in the event of an audit, in order for financial institutions to prove that they are abiding the regulations and mandates demanded of them.

In order for financial organisations to keep up with the digital economy and to meet the requirements set by regulatory bodies, they will need a reliable and watertight solution in place. This solution not only needs to be capable of governing the flow of data and keeping critical data safe from point A to point B, but also provide organisations with a complete overview of the lifecycle of information.

Digitalisation of the financial economy

Increased consumer demand for mobile applications and online banking has offered the financial industry a wealth of new opportunities. Only last month, the Paym initiative has meant that 30 million UK banking customers can make payment using only their mobile numbers.
Coinciding with a rise in tablet and mobile sales, set to break the £100bn mark, we are seeing more consumers making purchases, banking and communicating on their mobile phones; opening the door to new means of payment methods and giving rise to omni-channel communication. According to the British Bankers Association, Brits have now downloaded more than 12.4 million mobile banking apps while the number of transactions made using them has nearly doubled in a year, hitting 18.6 million a week in 2013.
These numbers show that these can be the deciding factor when it comes to consumers choosing between one bank and its competitors. A banks’ mobile banking offer can therefore give it the competitive edge especially as the switching guarantee will enable customers to change banks faster and easier.

Managing the risks

However, each technological innovation introduced to the market brings with it new concerns about data privacy, especially when it comes to mobile banking apps. With the protection of their customers’ data a top priority, a data breach or hacking intrusion is every bank’s worst nightmare, whether it’s through paperless desktop transfer or the latest smartphone banking app. The stakes are high with banks not only risking expensive fines but losing the trust of their customers. With the growth of mobile, challenges like this have increased tenfold, particularly as customer finances are regularly travelling through cyberspace, exposing thousands of pounds to hackers and cyber-criminals.

The banking ecosystem is vast and growing by the day presenting financial organisations with an enormous challenge to ensure that all data transfers are securely governed. With increasing interaction from customers, banking is a two way street and data flows must be correctly managed both to and from the customer and onto other organisations.

By implementing an API management strategy, financial organisations can manage the complete life cycle of data. Banks can be sure that customer data is fully protected and monitored from mobile to transaction to the bank or partner organisation and back to the customer. As each transaction passes through an API gateway, it’s authenticated and protected from the protocol level up. This enables organisations to block cyber-attacks, monitor data and prioritise data traffic.

By investing in solutions that offer this monitoring capability, financial institutions can be rest assured that they will avoid reputational damage through the latest cyber intrusion. And, are in a position to significantly reduce the risks associated with loss of customer loyalty if online accounts were to be hacked and also protect confidential corporate data from leakage and data loss.

Financial transparency and risk regulation

An API gateway also has the added benefit of meeting industry standard compliance. Transparency requires financial organisations to validate quarterly statement figures and prove accountancy within departments – all while keeping their customers anonymous. It requires businesses to satisfy more than just traditional, internal auditors – they have to satisfy external, regulatory auditors who are enforcing a slew of new regulations including “Know Your Customer”, “Money Laundering Regulations” and “Prudential Regulation Authority”. This is on top of leveraging payment standardised layers like Single Euro Payments Area (SEPA), Payment Services Directive (PSD) and electronic payments association, NACHA.

With real time insight into data transfers, financial organisations can improve transparency and support auditing requirements. The data available will allow organisations to demonstrate consistency across risk, business and accounting processes within complex organisations, as well as provide the ability to audit trail every automated and manual process.

A new breed of financial organisations

Banks have to modernise quickly and open up their payment value chains to increase the reach of their banking products and services. This will result in a more complex portfolio of payment services, solutions and applications, prompting financial institutions to assess more carefully how they manage their data.

By perfecting the flow of information in a financial business and analysing each transaction in real-time, several benefits can be reaped at once. Firstly, organisations can open up to new revenue streams through innovative digital forms of banking and can turn regulatory laws into business opportunities. And secondly, data exchange and API management solutions will perfect behind the scenes business management functions such as: auditing, regulation compliance and the management of customer data. Real-time insights allow for quick and informed responses, which can prove critical in the fast-paced world of finance. These solutions will massively improve the data agility of financial organisations, putting them in prime position to deal with the ever changing digital economy, and spurring the rise of a new financial business model, one that is equipped for the ever growing demand presented by technology.