Recent Moves in Washington Signify Ongoing Focus on Open Banking Adoption in the U.S.

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How to share that data, and do so safely and securely, is the challenge left up to the finance industry.

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Monday, October 18, 2021
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Software, Networks, Banking, Data Management, Professional Services, Technology, Mobile, Wireless, Security, Dodd–Frank Wall Street Reform and Consumer Protection Act, Organization, Technology, Computer, Industry, Adoption, Economy, Credit Suisse, CFPB, Executive order, API, FDX, Consumer Financial Protection Bureau, Nationwide Mutual Insurance Company, Complaint, Consumer, Application, Communication, Lockheed Martin, Online shopping
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ADAPTIGENT
Summary
Key Points: 
  • How to share that data, and do so safely and securely, is the challenge left up to the finance industry.
  • An additional obstacle has been accounting for differences in technology between banks and modern users.
  • The industry is coming together to create data sharing technical approaches through organizations like the Financial Data Exchange (FDX).
  • By using a tool that can truly scale, widespread changes to APIs can be made quickly and align with industry standards to help accelerate the adoption of open banking efforts.


With the recent confirmation of Rohit Chopra as Director of the Consumer Financial Protection Bureau (CFPB) and President Biden’s Executive Order on Promoting Competition in the American Economy this summer, financial experts agree – the modernization of the banking industry is coming.

The Executive Order puts pressure on the CFPB to implement regulations concerning section 1033 of the Dodd-Frank Act, which gives consumers the right to their financial data and, by extension, the right to provide said data to other financial products and institutions.

How to share that data, and do so safely and securely, is the challenge left up to the finance industry. Older methods, such as screen scraping, which is the practice of having a user log into their bank account through a third-party to complete a transaction, are now largely viewed as unsafe. An additional obstacle has been accounting for differences in technology between banks and modern users. The traditional mainframe computers of banks lag behind the technical advancements of consumer devices such as smartphones and cloud-based software, making communication between systems difficult without significant programming changes.

The industry is coming together to create data sharing technical approaches through organizations like the Financial Data Exchange (FDX). This nonprofit organization consisting of banks, financial institutions and fintechs is dedicated to unifying the entire industry around a common, interoperable standard for sharing consumer financial data via an API.

APIs (Application Programming Interfaces) are connections that facilitate the exchange of data between two systems. In addition to being more secure, they do not require code changes from either party. This is particularly appealing to banks, as mainframe developers have been increasingly hard to replace.

The approach is working: as of September FDX reported 22 million consumer accounts are now using the FDX API for open finance data sharing instead of screen scraping. However, challenges remain for enterprises who need to develop large numbers of APIs rapidly and efficiently.

“The most common complaint we hear from organizations about the mainframe is that it ‘slows down innovation’,” said Dr. Alex Heublein, president of Adaptigent. He continues, “But it doesn’t have to be that way. A happy medium approach that can satisfy both the technical and business leaders is a single platform that simplifies the process and reduces the timeframe to achieve integration.”

Adaptigent’s Adaptive Integration Fabric goes above and beyond these needs by simplifying the API building process into a low-code, drag-and-drop environment that is easy to use for programmers and financial experts alike. By using a tool that can truly scale, widespread changes to APIs can be made quickly and align with industry standards to help accelerate the adoption of open banking efforts.

About Adaptigent

Adaptigent empowers the adaptive, intelligent enterprise, unlocking the potential of legacy mission-critical systems to enable digital transformation. The company’s innovative solutions, led by the patented Adaptive Integration Fabric, use a no-code platform to provide real-time, business ready data and allow modern applications to connect with legacy systems. Adaptigent is built on 35+ years of modernization and technology expertise and trusted by leading companies including Credit Suisse, Nationwide Insurance, Lockheed Martin and Caterpillar to accelerate digital transformation.

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