Tech giant IBM has launched a platform designed to make it easier to integrate open banking services with legacy systems.
The Open Banking Platform is initially aimed at banks in the EU, which have to comply with the second payment services directive (PSD2), but the company will be looking to roll it out to other jurisdictions as they become more focused on open banking.
The platform is a software solution that sits as a layer on top of existing banking systems. It allows banks to access APIs from IBM and fintech providers. These can be used to build capabilities in areas such as financial risk, payments, artificial intelligence and blockchain, Tom Eck, IBM’s CTO for industry platforms told GTR at Sibos today.
“This is a foundation layer which is agnostic and can really be used in everything across financial services, and in other industries such as manufacturing. This is not a legacy system takeout approach. This is sitting a layer on top. It’s essential that, to have open banking, you need to have a connection to the core systems of banks, otherwise it’s a sandbox,” Eck says.
The system is powered by IBM Watson and has been developed due to demand in the European market. According to Eck, most organisations don’t have the motivation or resources to do a “rip and replace” strategy, whereby they take out their core banking systems, which have been embedded for decades in many cases.
He says that it is part of an ever-growing universe of platforms which are being built and implemented across the tech and financial services space. As with the likes of Uber and Airbnb, which operate on a model whereby they do not own physical assets, platforms allow financial institutions to dip into markets without investing in heavy infrastructure.
“This is a multi-cloud world. In Silicon Valley they have an expression: ‘Be the platform, not the product’,” Eck says, adding that he expects this trend to continue well into the future.