Venmo, just like Google, has become a proper noun AND a verb. Venmo solved a problem of an individual wanting to pay another individual (or even small business) without having to use cash, check or even debit/credit card. Open banking made this possible. Open banking allows third-party financial services companies to access consumer banking, transaction, and other financial data via the secure use of APIs. It is about opening up information to spur innovation of third-party providers to build new, added-value offerings.

Before open banking, financial institutions would hold on to its customers data, so it was difficult for new, innovative financial services providers to break into the market since they couldn’t access the data. It is akin to healthcare where you would not have been able to take your own personal medical records with you to a new practitioner. The emergence of open banking has dramatically changed the way people and small businesses manage their money and interact with financial tools and brands.

It wasn’t just that Venmo happened, but open banking for the digital ecosystem.

Open banking happened

It is critical that a financial institution’s ecosystem supports its brand and products. In today’s post pandemic world, the need for innovation at pace and scale is leading to the growing adoption and expansion of partner ecosystems to support the delivery of innovations to both customer experiences and process improvements.

Open banking comes with specific security requirements that ensure privacy, consumer control, thus creating a new financial services ecosystem where customers have choices and small and nimble tech companies disrupt and innovate. In the U.S. and Canada, the Financial Data Exchange (FDX), a non-profit industry standards body, provides a common standard for secure access to financial data. Its global membership encompasses all types of financial-related and interested stakeholders. With the increasing ability to share banking data with any trusted provider in the FDX, smaller non-legacy tied financial institutions have grown significantly.

This has helped formalize the industry to develop new, go-to open banking platforms and broadened the financial ecosystem.  No longer does the ‘build versus buy’ conundrum frustrate financial executives.  A new one has emerged which is partner, and it may include invest, which allows FIs to move and innovate faster without the internal challenges of buy/build.

This actually makes the banking landscape more competitive than ever as small community bank and credit unions without the financial muscle and resources can compete with the big banks by tapping into these companies and APIs.  It provides scale-defying opportunities and even big banks can leverage if they are investors or maybe even acquirers, plus the learnings.

All of this rapid change and push for innovation means that some financial institutions need to get out of their comfort zone and re-engineer their innovation strategies to identify the best way to deliver new products and services to digital ecosystem. Whatever mantra they choose, build/buy/partner, the support and foundation of the financial institution is critical. It is also the charge for letting go of legacy thinking about the outdated internal systems their sticking with and move toward newer platforms and Cloud-based solutions.

Cisco in the evolving ecosystem

New data sharing technologies even the best built APIs introduce a security risk and performance issues. Managing those applications in financial services is different than in any other industry. Regulations play a pivotal role in the development and support of FIs mission-critical applications, and these regulations often make application management more difficult.

That’s where Cisco AppDynamics comes in. AppDynamics puts AppOps and SecOps at the center of business success. We enable you to connect your infrastructure and monitor the impact it has on your applications. The application performance monitoring (APM) solution drives AIOps for hybrid architecture within your wider financial ecosystem.  The results are:

  • Drive IT efficiency – Reduce mean time to recovery (MTTR) with fast root-cause analysis and correlate software and business KPIs to diagnose performance issues.
  • Monitor any app – Leverage real-time performance monitoring for flawless application performance in public, private, or multicloud environments.
  • Full stack scalability – Achieve enterprise scalability with low-overhead monitoring agents.
  • Robust security – Get a secure-by-design architecture and granular, role-based access controls.

What’s next

In short, open banking offers enormous possibilities assuming they find the right and secure the right partner. The end result is offering consumers improved experiences and more choices to manage their daily financial wellness. Application performance can have a significant impact on customer satisfaction and Cisco AppDynamics gives you comprehensive visibility from code to consumer and everything in between.

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Adam Neiberg

Global Industry Marketing Manager