wipro.com

Open For Business: Are Financial Organizations Ready To Harness The Open API Revolution?

2

“If we can make their experience better,give them information they didn't even know they needed, then we'll be leading the pack,” says Chris Venter, General Manager of Consumer Digital Technologyat ANZ.“

icture this: you’re in the middle of a business trip to Tokyo – a city you’ve never been to before – and you run out of cash. If this had taken place just a few years ago, you would have panicked at the thought of being stranded.

Today, such a scenario is but a minor inconvenience. You can simply reach for your mobile phone and launch an application that lets you locate the nearest ATM, find real-time exchange rate information, or monitor your bank account during the trip. You may not even need your bank card, as some payments can be made by waving your smartphone in front of a sensor or by transferring virtual currencies.

How did this scenario become a reality so quickly? The answer is application programming inter-faces (APIs), which are software gateways that let applications work together. APIs allow users to securely connect with just about

any pre-defined service, applica-tion, or database. This technology is currently driving a wave of digital disruption in the finance sector. By allowing outside devel-opers to access their propriety software, banks can benefit from innovative apps and new ideas. Consumers, in turn, enjoy greater transparency in their interactions with banks as well as sophisticat-ed new features and services.

“If we can make their experience better, give them information they didn't even know they needed, then we'll be leading the pack,” says Chris Venter, General Man-ager of Consumer Digital Tech-nology at ANZ. “Especially for companies and businesses, if we can help them aggregate their information into actionable insights, we'll make a real difference in their finances. We need to be able to show them how much they spend, how much they make, essentially showing what their cash flow should or could be compared to similarly sized organizations.”

P

3

4

Takingadvantage of new opportunities

Open banking has risen exception-ally fast in the past few years (see chart below). Banks have greater control over raw data and are able to move beyond traditional

”Open data and APIs disrupt established ways of working,” says Philip Bowkley, Head of Non-Bank Financial Institutions (NBFI) at Barclays Corporate Banking. “Because innovations borne from Open API experi-mentation tend to be driven by customer demand, they are pushing banks to become more flexible and dynamic in the way they respond to new challenges.”

For Max Tiong, Head of Startups

and FinTech at DBS , harnessing

APIs also involves adopting a

new approach to collaboration,

building an ecosystem of trust-

ed, capable, and strategic part-

ners that can plan and execute

innovative Open Banking strat-

egies in ways that traditional

banking entities cannot.

“FinTech companies are the real

drivers of banking and financial

innovation,” he says. “They can

take risks that banks cannot take

2009

2013518

11889

5070 60

3957 63

1522

508474

369 348 338 333 315 312298

Soci

al

Fina

ncia

lEn

terp

rise

Map

ping

E-co

mm

erce

Gov

ernm

ent

Scie

nce

Mes

sagin

gPa

ymen

tsTe

lepho

ny

Growth of Top 10

Web API Categories

Since 2009

Programmable web

“Because innovations borne from Open API experimentation tend to be driven by customer demand, they are pushing banks to become more flexible and dynamic in the way they respond to new challenges,” says Philip Bowkley, Head of Non-Bank Financial Institutions (NBFI) at Barclays Corporate Banking.

payment or account services, not only offering enhanced customer experiences, but also transforming day-to-day transactions into new digital revenue streams.

5

themselves, experimenting with

technologies that the banks do

not necessarily know how to use,

and tweaking a product or

service until it becomes profitable.”

This kind of collaboration not

only expands the breadth and

scope of the products and

services banks can offer, it also

ensures they will come out

unscathed from the paradigm

shift that is taking place.

“Banks have tradit ionally

evolved in closed and protected

environments,” says Neal Cross,

Chief Innovation Officer at DBS

Bank. “Today, they are varying

the type of partners they work

with, integrating technologies

and services that go well beyond

their traditional roles. They are

essentially becoming a plat-

form for people to add value as

they see fit.”

For Praveen Raina, Senior Vice

President, Group Operations &

Technology at Oversea-Chinese

Banking Corporation (OCBC),

banks reluctant to adopt this

technology won’t be able to

avoid shifting their mindsets for

much longer. “True innovation is

not just about technology,” he

says. ”It’s about adopting the

right processes at the right time.

In the next five years, all banks

will have to make strategic

choices about Open APIs to

avoid being left behind.”

“Today, they arevarying the type of partners they workwith, integrating technologies and services that gowell beyond their traditional roles. They are essentially becoming a platformfor people to addvalue as they see fit,” says Neal Cross, Chief InnovationOfficer at DBS Bank.

Praveen Raina, Senior Vice President, Group Operations& Technology at Oversea-Chinese Banking Corporation (OCBC), banks reluctant to adoptthis technology won’t be able to avoid shifting their mindsets for much longer. “True innovation is not just about technology,” he says. ”It’s about adopting the right processes at the right time.”

6

Addressing roadblocks

Some banks have already started

integrating Open APIs into their

processes and architecture, effec-

tively adapting legacy processes

and infrastructures. But to fully

harness the power of Open APIs,

they must be able to comply with

new emerging Open Banking API

standards and regulations, and

ensure the security and quality of

the data being shared and

accessed.

Started in Berlin as an open-source, open-standards, and open-data API developer portal, the Open Bank Project aims to open up transaction data by directly accessing each bank’s core banking system. By taking away restrictive specificities, developers can use the same application across different banks.

The United Kingdom is also making encouraging headway in this area. In September 2015, the industry-led Open Banking Work-ing Group (OBWG) was tasked

with developing a new framework that will help create an Open Banking standard, including a legislative framework that may be used to release APIs if the indus-try fails to implement the changes on its own.

In its preliminary report, the OBWG outlined a set of recom-mendations to make Open APIs useful and viable, including a timeline that would see a fully functioning UK open data market become a reality by the end of March 2019.

Transforming standardsand regulations

7

The European Union's (EU) Payment Services Directive II (PSD2), meanwhile, was launched in October 2015 to make cross-border payments within the EU as easy, efficient, and secure as “national” payments within a member state. When implement-ed in December 2017, PSD2 will force banks to push the bounda-ries of open banking and strengthen their digital offerings.

As these developments indicate,

it’s not a case of if, but when banks will need to define their open banking strategy. Philip Bowkley puts i t this way: “Banks must quickly determine the way they will respond to the changes brought about by Open Banking; do they want to become a trans-action platform for payments made through third-party vendors? Or do they want to make a foray into innovative services developed in partnership with FinTech partners?”

Securing data and ensuringlong-term compliance

The Asia-Pacific region leads the way when it comes to creating an environment in which banks, start-ups, regulators, providers, and competitors can work togeth-er relatively fluidly to ensure Open APIs are developed as securely as possible.

“Our strategy is to make sure our APIs are ready; for instance, we've developed a portal for developers to find standard definitions of APIs, how to use the APIs, licenses and uses, and so forth,” says ANZ’s Chris Venter. “We've essentially developed internal protocols that will be able to be used externally once the moment comes.”

Max Tiong of DBS points out that the “full support of key govern-ment organizations is clearly felt in China, Singapore, and Australia. In these markets, clear business, data, security, and technology agendas are set, allowing banks to

create flexible and reactive regula-

tory frameworks that put security

at the heart of all processes.”

As a resul t , banks can focus

on creat ing cus tomer and

business-driven products that

ensure data can’t be compro-

mised before being entrusted to a

third party, as opposed to devel-

oping purely technology-driven

services that ignore potential

vulnerabilities to seek immediate

returns on investment.

“For banks to take Open APIs to

the next level, the region’s banking

sectors needs to work together to

reinforce their key security

enablers,” says Philip Bowkley.

“Whether it is user security, ‘Know

Your Customer’ protocols, or

basic identification standards, a

strong impulse is needed to

continue protecting customers,

their assets, and their interests.”

“Banks must quickly determine the way they will respond to the changes brought about by open banking; do they want to become a transaction platform for payments made through third-party vendors? Or do they want to make a foray into innovative services developed in partnership with FinTech partners?”, says Philip Bowkley, Head of Non-Bank Financial Institutions (NBFI) at Barclays Corporate Banking.

Max Tiong of DBS points out that the full support of key government organizations is clearly felt in China, Singapore, and Australia.

8

Despite having identical technolo-gies, objectives, and processes, some organizations are closer than others in making this scenario a reality. Citigroup, BBVA Compass, Bank of America, and Capital One are among the large U.S. banks that have been making parts of their internally developed software code available to external develop-ers. In March 2016, Capital One became the first U.S. bank to launch a full-featured developer portal. Called Capital One DevEx-change, the portal engages devel-opers through such features as self-serve registration, instant API access, documentation, and testing environments.

The ideal API platform is a co-inno-vation platform that works completely outside the traditional enterprise in a way that is at once open and extensible, fast and agile, and scalable to fit almost any

purpose. A new California compa-ny just may fit that bill. Paymency, based in San Diego and founded by banking veteran Gary Lewis Evans, expects to offer an API-based platform for finance and banking similar to Amazon’s platform for retail. Much like a digital store, Paymency’s platform would offer a range of products and services from various FinTech companies and other partners, including non-bank entities.

Finding a trusted, reliable, and appropriate API platform can be an invaluable advantage for a banking organization looking to harness the power of Open APIs. Moving to Open Banking is like "breaking a few windows to let free air and light in," Andres Wolberg-Stok, global head of emerging platforms and services at Citigroup, has been quoted as saying. "It ends up bene-fiting FinTech as a space."

Finding an appropriate platform

Moving to open banking is like "breaking a few windows to let free air and light in," Andres Wolberg-Stok, global head of emerging platformsand services at Citigroup, has been quoted as saying. "It ends up benefiting FinTech as a space."

9

Conclusion

The way customers interact with

banks is changing fast. Thanks to

Open APIs and the myriad

consumer-centric applications,

programs, and services they

enable, people will soon be able

to launch transactions, complete

payments, and manage their

wealth without feeling − or knowing

− they are actually interacting

with a bank or financial institution.

By harnessing this technology,

banks will be able to play a wider

range of roles across the financial

value chain, varying their product

offerings and transforming the

way products are delivered − thus,

responding to customer demand

and locking in their loyalty.

Is your organization on board to

reap the benefits?

10

Driving innovation with open APIs

“It’s all too easy to view Open APIs

as a threat, but in reality they pres-

ent huge opportunities for banks,“

says Presanna V. Sundararajan,

Wipro’s Practice Head of Block-

chain and API Platform. “It's an

opportunity to spend less, do

more and explore new ways and

ideas to use valuable data gained

over years that’s there at the

bank’s disposal.”

“Many banks are already adopt-

ing Open APIs,” he adds, seizing

the opportunity to “drive an

outside-in innovation culture,”

customize their offerings, and

move away from a one-size-fits all

approach. Sundararajan also cites

a significant push coming from

regulators to reduce the entry

barriers and drive more competi-

tion in the financial industry.

Still, he cautions that there are

major challenges to the develop-

ment of Open APIs. One is to

make sure that legacy infrastruc-

ture does not come in the way of

scalable, robust APIs. “APIs built

with shortest path to host is an

approach some of the banks have

started adopting to overcome this

challenge,” Sundararajan says.

Other big challenges, in his view,

are to ensure secure access, lever-

age emerging security standards,

prevent hacks and attacks, and

comply with privacy and other

regulations.

It’s also important to actively

engage the developer communi-

ty, soliciting feedback and build-

ing APIs that really make a differ-

ence, he says, and this can be

addressed with a strategy

focused on community building.

Ultimately, however, Open Bank-

ing initiatives are not just about

technology, Sundararajan points

out: they are about building a

customer value ecosystem

centered on the bank. “The

challenge, therefore, is to create

an Open Banking infrastructure

that accelerates the bank’s

journey in building an API-ena-

bled ecosystem of internal,

partner and third-party value

networks.”

“It’s all too easy toview open APIs as a threat, but in reality they present huge opportunities forbanks,” says Presanna V. Sundararajan,Wipro’s Practice Head of Blockchain andAPI Platform.

11

About Wipro

Wipro Limited (NYSE: WIT, BSE: 507685, NSE: WIPRO) is a leading infor-

mation technology, consulting and business process services company

that delivers solutions to enable its clients do business better. Wipro

delivers winning business outcomes through its deep industry experi-

ence and a 360 degree view of “Business through Technology.” By com-

bining digital strategy, customer centric design, advanced analytics and

product engineering approach, Wipro helps its clients create successful

and adaptive businesses. A company recognized globally for its compre-

hensive portfolio of services, strong commitment to sustainability and

good corporate citizenship, Wipro has a dedicated workforce of over

170,000, serving clients across 6 continents. For more information,

please visit www.wipro.com

WIPRO TECHNOLOGIES, DODDAKANNELLI, SARJAPUR ROAD, BANGALORE - 560 035, INDIA. TEL : +91 (80) 2844 0011, FAX : +91 (80) 2844 0256

“No part of this booklet may be reproduced in any form by any electronic or mechanical means (including photocopying, recording and printing) without permission in writing from the publisher, except for reading and browsing via the world wide web. Users are not permitted to mount this booklet on any network server.”

DO BUSINESS BETTER CO N S U LT I N G | SY ST E M I N T E G R AT I O N | B U S I N E S S P R O C E S S S E R V I C E S

© Wipro LTD 2016 IND/B&T/JUN-DEC2016