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The banking industry is currently in an era where it is moving to more digitalization with the emergence of open banking. Regulators are pushing banks to be compliant with open banking all over the world. But in the process of achieving compliance banks will incur costs such as infrastructure costs, costs for IT specialists, and software solution vendors. With all of this what do banks really get? Is it only a tick in the compliance box? Or can banks use these to achieve other use cases as well? Basically, how can banks improve their ROI on open banking investment?
There are a lot of ways that banks can use these software platforms to achieve their business goals. Here I am going to share my thoughts on how banks can use the mandatory reporting requirements imposed by open banking regulators for banks' strategic planning and other business use cases. In simple terms, how open banking solutions can be used as a simple management information System (MIS).
If you continue reading you will first learn what management information is and an MIS is. Then you will find a brief introduction about specification compliance and their references. If you move further you will learn what kind of raw data and information will be available there and how you can use that information. Finally, you will end up getting some thoughts on how you can convert this raw data into something useful and for the presentation of management information.
Management Information and Management Information Systems
First, let’s see what MIS and Management Information are:
Management Information is communication that leads to a managerial action, managerial action is a betterment achieved through a process of planning and control. - Richard J. Boland Jr
A management information system (MIS) is an information system used for decision-making, and for the coordination, control, analysis, and visualization of information in an organization.
So now let's see how the banks can develop, convert or use an open banking solution as a management information generator or as an MIS.
Spec Compliance — Why Do Banks Need Reporting?
Regulatory bodies like FCA, OBIE, and ACCC all mandate banks to report or expose their management information to them regarding their open banking setups. So it is a mandatory requirement to tick the compliance box. You can refer to OBIE spec regarding MI reporting and AU spec regarding CDR metrics to get an understanding of how regularities impose this requirement on banks.
What do regulators use this data for? I guess they also use these to understand how their open banking ecosystem performs and to plan how they need to proceed with certain requirements. If you go through this API performance details published by OBIE you can understand the value of information that the bank provides to regulators.
Before talking about going beyond compliance first let’s have a look about what kind of raw data and information are available.
Types of Raw Data Available
Basically to cater OBIE and ACCC requirements banks need to save all the data related to their open banking ecosystem. Some of them are:
- PSUs or CDR consumers - From first-time use to every usage of the service
- TPPs or Data Recipients - From onboarding up to deregistration
- API calls - From token generation calls to resource invoking
- Authentication - All data related authentication whether it is successful or not
- Authorization - From the consent was give or not for a particular request to multi auth details
- System availability and performance - From downtimes to API response times
Once you go through the list you can see that in order to cater to a compliant solution your open banking platform has all this data. So why don’t you use this data for your bank’s strategic planning?
Are There Any Management Information (Summary Info) Available in Solutions?
Yes, there should be because OBIE reports/CDR registry requires information, not the raw data. So solutions have some information that you can use straight away. Some of those are:
- No of new PSUs who registered with the bank for a particular month
- No of TPPs registered/ deregistered with the bank for a particular month
- How the particular resources get invoked per month
- Successful authentication counts failed counts
- Consent approval and disapproval counts
- Average response times for API calls
Now the most important part is how can banks use this as MIS. As you saw there are two layers: data and information. Let's now explore how they can be used.
Example of How Banks Can Make Use of This Information and Raw Data
First, the information
Even though I am not an Information or business analyst, I will point you to some examples that you can understand the usage here. Obviously analysts will have more input on this.
- No of new PSUs that used the bank's service
This will definitely give a great idea of how customers are involved with this concept and then the bank can plan how they need to react to it. For example, if a bank has a 1000k customer base and 1k only using open banking services with a growing rate of 100 customers per month the bank needs to review it because the world is moving faster than that. So they can look into that aspect in their strategic planning.
- API resource usages
Let’s think about PRD endpoints in the AU region. API usages of these endpoints will give banks an idea of how many people are searching for their products. Later banks can compare that with the number that actually converts into business and if that is getting lesser they can make the business decisions of the banks accordingly. Also with this, they will get a better picture of less interesting products they offer and might change those or plan a campaign to promote those efficiently.
- TPP/ADR registration and deregistrations
Banks can compare the registering number of service providers with them with the available service providers in the open banking community. Also, they can see the deregistrations of service providers. That might be due to banks’ open banking ecosystem issues or difficulties with onboarding processors or anything that will be a point to think.
Second, raw data
How Banks Can Convert Raw Data Into Something Worth?
Most probably you should be able to use the existing software vendor’s summarizing model for you. Because to cater to spec requirements they need to have a way to summarize the raw data. What you will have to do is write specific queries that can make useful information.
If not you can use software platforms that can be used to process your raw data such as WSO2 Streaming Integrator, Apache Spark or Kafka. You can select that based on your open banking solution vendor, how they maintain the raw data layer, your architecture, and the data amount you have to deal with.
Presentation of Information
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The information we had before and the information we made with converting the raw data are available in databases. So these should be presented in a way that management can look into. If there are dashboards available with your software vendor you can simply use those for presentation and if not you can use a tool to extract these data and report it. One most commonly used one is JasperReports.
In the emergence of open banking concept banks are mandated to be compliant with it. Here I have explained how banks can use the available data/management information about their system for their strategic planning for better business use cases.
Learn more about WSO2 Open Banking here. You can also check out my blog where I regularly write about open banking concepts.