Open banking: The rise of the cloud platform

Abstract

This paper explores how traditional banking system architectures will be affected by the emergence of open banking. Platform models for open banking are proposed that accommodate both supply and demand-side solutions. On the demand side, the network effects of open banking platforms and their limitations are discussed. Using a feedback model of platform behaviour, it is suggested that the long-term success of open banking can be directly coupled to the emergence of such platforms and their regulatory scope. To inform the architectures to support open banking, the unique transactional characteristics of open banking solutions are determined. The essential role of cloud technologies in meeting these characteristics and hence the propensity for their use in the implementation of open banking platforms is illustrated. Specific types of open banking platforms are then described in terms of their essential architectural components and collaborations. The benefits to account servicing payment service providers and to third-party providers in adopting such open banking platforms are highlighted.