Deploying Open Banking APIs on AWS

© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.
Ronan Guilfoyle, Principal Solutions Architect
6 November, 2018
Open banking on AWS
Deploying Open Banking APIs on AWS

© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.
Open banking is here

Open banking is now the standard for digital banks
Banks that want to transform are embracing open banking – and it’s quickly spreading across the globe.
50% of G20 countries expect to create open banking standards by 20181.
1. Hype Cycle for Open Banking APIs, Apps and App Stores, Gartner 2015
OPEN BANKING STANDARDS
Approved
Active consideration
Australia: The four
largest banks2 will
have open banking
data by July 2019.
2. National Australia Bank, Commonwealth Bank, Australia and New Zealand Banking Group, Westpac
Hong Kong, Singapore and
Malaysia: Leading the adoption of
open banking in Asia.
Mexico: Lower House of
Congress approved law
that permits sharing of
user information by
financial institutions
through open APIs.
USA: Treasury
Department
published guidance
for open banking.
Europe: UK CMA Open
Banking Standard
and EU PSD2 came into
force in January 2018.
Japan: Active government
promotion of adoption of open APIs
by banks. The target is to have 80
banks with open APIs by 2020.

European regulations are accelerating adoption
EU and UK regulations require banks to allow third-party providers access to customer account
information and the bank’s payments infrastructure with explicit customer consent
• Requires all European banks to provide access
to account information and originate payments
on behalf of customer.
• Requires secure customer authentication.
• Does not define minimum technical
standards for open APIs for each bank.
1. “Payment services” https://ec.europa.eu/info/business-economy-euro/banking-and-finance/consumer-finance-and-payments/payment-services/payment-services_en, The European Commission, 2018
• Requires the nine largest banks in the UK to
provide access to customer account
information via open APIs2.
• Dictates one single technical standard for
open APIs across all affected banks.
2. The 9 mandated institutions in UK (referred to as the CMA9) are: Barclays plc, Lloyds Banking Group plc, Santander, Danske, HSBC, RBS, Bank of Ireland, Nationwide and AIBG
Second EU Payment Services Directive (PSD2)1 UK CMA Open Banking Standards

To Competition Markets Authority (CMA) investigated retail banking and found a lack
of competition. The largest nine banks were found to have significant influence in the
market, with the largest four banks in the UK accounting for over 70% of personal
current accounts.
The CMA produced a wide-reaching package of reforms, and one of the
remedies is Open Banking.
Why Open Banking? … and why these nine banks?

A bitter pill?

Or the best medicine?

Why should I, as a bank, want open APIs?
…Because you must?

Open Banking is more than regulatory compliance
Build a technology
ecosystem
Create new revenue
and business models
Enable continuous delivery
across portals and devices
Integrate FinTech into
the banking value chain
Open banking creates
better experiences
for customers
Aggregate customer
and transaction data
Consumer expectations are driving the shift towards open APIs – and 67% of financial customers say
they would share more data with banks in return for new benefits1.
1. Accenture Financial Providers: Transforming Distribution Models For The Evolving Consumer 2017 study. https://www.accenture.com/us-en/insight-financial-services-distribution-marketing-consumer-study
Open new distribution
channels for bank
products and services
Personalize offers
and messages

Why should I, as a bank, want open APIs?
…or because you want to?

Starling Bank saw an opportunity in open banking
“I saw a world where a company would do one thing really, really
well, then live in a marketplace with other services that together,
fulfill every banking need.”
- Anne Boden, CEO and Founder, Starling Bank
By building a bank with an open API
from day one, Starling became
natively compliant with the PSD2
directive. This put the bank one step
ahead of its established competitors.
Starling decided to respond to
customer frustrations by building
a bank on AWS that combines the
convenience of a mobile-first
experience with the functionality
of a fully licensed bank
In 2017, Starling Bank released
their open API, and launched
Starling Marketplace to developers.
The bank has become a launchpad
for several new payments and
banking integrations.
Mobile-only UK bank

“Banks aren’t being disrupted by FinTech technology,
they’re being disrupted by customer expectations.”
- McKinsey & Company
Innovate

They chose to build their open banking
platform on AWS, and completed it
within 5 weeks – ahead of the
regulatory deadline. The solution is
scalable, and able to be deployed in
Canada, Mexico, Hong Kong, Australia,
and other regions as regulation allows.
The bank needed to rapidly develop
its open banking propositions to
meet growing expectations of retail
banking customers, and compete
more effectively with FinTech start-
ups and challenger banks.
AWS technology has not only helped
the bank to be complaint, but also
cost-effectively scale compute capacity
and utilize advanced data analytics to
drive business growth globally.
One of the world’s largest banks
Name
withheld
A multinational G-SIB built open banking on AWS
The bank’s Open Banking and Connected Money services use AWS services
including: WAF, CloudFront, Route 53, API Gateway, S3, ELB, EC2, Lambda,
VPC, KMS, SQS, CloudWatch, CloudTrail, and Elastic Beanstalk.

Transform

In In less than a month, the bank
built a developer sandbox with 155
open APIs across 20 categories that
emulate the production APIs used
internally at the bank.
The bank wanted to simplify
collaboration with partners, and
develop new applications at scale;
the teams running its productions
systems did not have the capacity
to develop many partnerships.
At launch, more than 50 partners
joined the platform, including
FinTechs and large financial and non-
financial corporations. DBS
accelerated its CI/CD pipeline and
enabled agile innovation in the bank.
Leading bank in Asia
Build an open API sandbox to enable FinTech innovation
Name
withheld

Open APIs lead to a wide variety of business models
API Marketplace Aggregator Partnership
Connect customers
with a wide choice of
apps that work
seamlessly with bank
accounts
• Value: Create bank
services ecosystems
• Business model:
Charge for API
connections, or set
up revenue share if
third parties bring
new customers
Enhance customer
experience through
access to best in class
execution services via
one app
• Value: Multibank
offering
• Business model:
Charge for service
and transactions
Banking as a platform
Enable partners to
integrate bank modules
in their own offerings
• Value: Enable
partners to accelerate
their digital strategy
• Business model:
Charge for licenses,
subscriptions,
maintenance
Attract new
customers through
partnerships with
third parties
• Value: Deliver
high-class products
with partners
• Business model:
Revenue share with
partners
API Vendor
Provide high-quality
banking data to
third parties
• Value: Securely
provide access to
customer data
• Business model:
Charge for data
volumes

Consumer Facing
Core Facing
APIs: OpenBanking, PSD2 etc.
APIs: Core, Fraud, CRM, KYC etc.
N – Tier API architecture

Partner

Monzo built open APIs to give customers more options
“…we provided the API anyway because we think it’s where the industry is
going. Now, Monzo users can integrate their accounts with other services. For
our tech-savvy customers, this is great news.”
- Matt Heath, Distributed Systems Engineer, Monzo
Because the bank runs on cloud
infrastructure, as Monzo’s customer
base grows, teams can focus on
developing new features like open
banking integrations, rather than
managing the underlying IT.
Open Banking regulations
required the nine largest UK banks
to provide an API for their users’
account information – Monzo
wasn’t one of these banks, but
decided to build the API on AWS.
Today, Monzo runs 400 core-
banking microservices on AWS that
allow half a million customers to
access their accounts, including
third-party integrations, so they can
instantly manage their money.
Mobile-first UK bank

Deliver
“While 96% of banking executives agree that the industry is
evolving toward a digital banking ecosystem, only 13% say
they have the systems in place to support it.”
- Capgemini and Efma World Retail Banking Report 2016

The ability to act quickly is crucial
Banks that do not build open APIs risk being left behind as consumers continue to shift to digital
alternative payments and banking.
70
87
121
177
2005 2010 2015 2020
5%
7%
8%
Non-cash transactions in Europe (in billion EUR)
CAGR
Share of non-cash transactions in Europe (in %)
Alternative
payment
methods1
Cheques
Debit and credit
cards
Credit transfers
and direct debits
10% 6% 3%
2%
1. Alternative payment methods include payments not initiated through a bank current account
16%
Source: A.T. Kearney European payment market model, which builds on as-is data from European Central Bank, Retail Banking Research and other sources
34% 40%
45%
42%
55% 53% 47%
40%
2005 2010 2015 2020
5%1%1%

How does AWS create value for banks that build open APIs?
With AWS, financial institutions can meet regulatory requirements while developing new business models
– by building a secure, scalable, innovative platform for open banking in the cloud.
Innovate faster with over
100 AWS services
Build unified APIs on
multiple microservices
Scale APIs based on
demand
Implement high levels
of security
Authenticate and
authorize requests
Enable throttling and protect
against DDoS attacks

What does open banking look like on AWS?
AWS Virtual Private Cloud (VPC) enables secure, scalable, and resilient deployment of digital banking open
API components. Both cloud-native and hybrid architectures are supported.
Native AWS
Identity and
Authorization
Banking API
API Security1
2
3
4 Core Banking
Optimized cost+
Improved latency+
Modern
architecture+
Effort-
App protection 1 Issuance of credentials 2 Processes API calls 3 Differentiating features 4
Hybrid
Initial TTM
Leverage existing
investment
Performance and
traffic charges-
Prolonged
technical debt
Identity and
Authorization
Banking API
API Security1
2
3
4 Core Banking
+
+
-
Cloud
On-premise

Banking APIs that run on AWS benefit all stakeholders
• Improved performance across locations
• Speed – provide instant or near-instant access to accounts
• Tailored and relevant content
• Managed CI/CD DevOps pipelines
• API-driven infrastructure
• Elastic and scalable environment
• Standard (Oauth 2.0) conform identity provider
• Tamper-resistant logging and audit capabilities
• AI-powered fraud and anomaly detections
• Access to audit reports
• Programmatic evaluation of controls and adherence to policy
Security
DevOps
Customers
Auditors
Business Owners
• Frictionless integration with state of the art data lakes and analytics
• Strategic insights into customer behavior from an otherwise regulatory burden
• Provide clear pricing information for services (e.g. fees for API calls)

How can I start?

Open Banking APIs have complex requirements
Requirements
• Mutual TLS Authentication (API and IdP)
• Specified by Open Banking (UK) & Berlin Group
(EU)
• OAuth2 Hybrid flow
• FAPI & CIBA security profiles

Graphic © Open Banking Limited, 2018, https://www.openbanking.org.uk/customers/what-is-open-banking/
New payment flows and authentication methods

• Deploy software on demand
• 1280+ ISVs
• 4200+ product listings
• Procure new or BYOL
• Billed through AWS account
• Deployed in 15 Regions
• 160,000 Active Customers
• 481M EC2 hours deployed per month
Find, test, buy, and deploy software in the cloud
“Cloud will increasingly be the default
option for software deployment.”
- Gartner

Banking
Application
Payment Service
UserThird Party
Provider
Development Portal &
Mock API back-end
Reverse-Proxy or
Marketplace
API-Gateway
VPC
NLB
Subnet
Proxy
Subnet
HSM Subnet IDP
Subnet
Dev Account
/VPC
Digital App
/Core
On Premises
Auth
Endpoint
NLB
API
Endpoint
NLB
Instances
HSM
Privatelink
Traditional
Core
Instances

AWS has the partnerships that banks need to build an open API environment.
AWS APN Premier Consulting Partner AWS APN Premier Consulting Partner
Accenture guides banks through
the key implementation steps of
developing an open platform.
Banks benefit from solutions that
help build the organizational,
functional and technical capabilities
that open banking requires.
Capgemini’s PSD2 Open Banking
Solution, hosted on AWS, is a
highly scalable, resilient solution
capable of significantly reducing
risk and cost of compliance.
GFT draws on an unparalleled
practical experience of financial
markets and a deep knowledge
of cloud technology to
accelerate your journey to the
towards creating open-banking
solutions to meet strategic
requirements.
AWS APN Consulting Partner
AWS APN Partners have open banking solutions

Thank you!
Any questions?

Open Banking
https://www.openbanking.org.uk/providers/standards
• Technical Specifications
• Security Profile (FAPI and CIBA profiles)
• Customer Experience Guidelines
Further reading

Appendix: Reference architecture

Deploying Open Banking APIs on AWS

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