Background

A leading legacy bank, with decades of operation, faced challenges in adapting to the open banking revolution. As regulatory pressure increased and the demand for third-party financial services surged, the bank realized it needed to modernize its system to remain competitive, offer better customer experiences, and comply with new regulatory standards. The bank’s core system was monolithic, difficult to modify, and built- in support for API integration. It was time to rethink their approach to data sharing and security.

Challenges:

Monolithic Legacy Architecture:

The bank’s old system was tightly integrated and lacked the modularity needed to expose data via APIs. This made it extremely difficult to enable real-time interactions with external fintech applications.

Data Locking:

Important data was scattered across different departments and not easily accessible for integration. This created barriers for sharing necessary information with external providers under open banking regulations.

Security Risks:

The legacy system was not designed with modern security protocols in mind, making it hard to ensure that third-party applications could securely access customer data in line with open banking compliance (PSD2 regulations).

Slow Innovation:

The bank wanted to innovate with new services such as mobile payment platforms, AI- Powered budgeting apps, and personalized financial advice but couldn’t due to the infrastructure.

Solution:

The bank partnered with a leading API management provider to help transition their legacy into a modern open banking infrastructure. Here’s how the solution was implemented.

API Layer Implementation:

A modern API layer was implemented over the existing legacy systems, allowing the bank to expose key data and services to third-party developers without disrupting the core system. The API layer was designed to be modular and capable of handling diverse requests from external fintech applications.

Standardization and security Protocols:

With the help of API management tools, the bank adopted industry standard security protocols such as OAuth 2.0 and Open ID Connect, ensuring secure customer authentication and authorization when third-party apps accessed data. API gateways were deployed to enforce data protection standards, including encryption, user consent management, and secure access control.

Data Integration:

The bank’s scattered data across multiple silos was brought into a unified API management system. By using an API gateway, the bank made it possible to share customer transaction history, balances, and payment data securely with trusted third parties while keeping sensitive data under strict control.

Scalability and flexibility:

The new solution was designed to scale with the bank’s growth and evolving customer needs. Whether the bank added new services or integrated with more fintech, the system could handle increased traffic and more complex interactions seamlessly.

Compliance with Regulations:

The bank’s API management platform was equipped with tools to ensure that all interactions were in full compliance with open banking regulations (e, g; PSD2). This involved automated reporting and audit capabilities, which helped the bank easily demonstrate compliance to regulators.

In a dynamic business environment, scalability is crucial. IT services provide the flexibility to scale up or down your resources based on changing business needs. Cloud services, for instance, allow seamless expansion of storage and computational power

Serana Belluci

Product Designer

Results

Accelerated Time-to-Market for New Services:

With APIs in the place, the bank was able to quickly roll out new services, such as mobile payment solutions and personalized finance tools for their customers, leading to increased customer engagement and satisfaction.

Enhanced Collaboration with Third Parties:

By exposing secure, standardized APIs, the bank fostered a strong ecosystem of third-party fintech providers. This led to new business opportunities, partnerships, and innovative products, which kept the bank competitive in an increasingly digital financial world.

Improved Customer Experience

Customers now enjoyed seamless access to their financial data via a range of apps, from budgeting tools to personalized investment recommendations. The bank’s open banking platform made these third- party applications work the bank’s services, resulting in an enhanced customer experience.

Increased Operational Efficiency:

The centralized API management system improved internal operations by streamlining workflows and reducing the complexity of multiple interfaces. This not only made system maintenance easier but also improved data accuracy and reduced costs associated with handling requests manually.

Robust Security and Compliance:

The bank’s API management solution ensured that all third- party applications were granted access only to the data they were authorized to see. Regular security audits and monitoring capabilities provided reassurance to both customers and regulations that all activities were fully compliant with the latest banking regulations.

Conclusion:

By implementing modern API management, the bank successfully transformed its legacy system to support open banking. The result was a more agile, innovative, and secure banking infrastructure that met both regulatory demands and customer expectations. The bank could now seamlessly collaborate with third-party fintech, offer new digital services, and remain competitive in an ever- evolving financial landscape. The bank’s commitment to embracing new technologies through API management ensured they were well-positioned for the future of banking.