architecture of banking system

Banking architecture does not vary too much regardless of the system being used, or the country it is used in. When a customer makes a payment, the customer needs to go through all the authentication steps and provide their consent every time, even if that transaction does not have a risk. So then the third parties can consume those APIs and generate new services to the bank’s customers. What matters is having a core banking system that fits requirements. When thinking about an open banking platform, you need to think about whether that platform will have this capability or if your bank already has a transaction risk analysis solution, and whether it can be integrated with this open banking platform. We are working towards the Australia CDR specification too. This website uses cookies so that we can provide you with the best user experience. The company In doing that first the bank needs to strongly identify the customer. The bank should properly design how to test and verify the whole platform before putting it in production. This redirection can be done either via a browser or via a mobile app. Banking business architecture is the foundation for transformation and is a strategic imperative for banks to survive and thrive. Robust stress-testing will ensure that the open banking platform is capable of dealing with not only anticipated demands but also higher-than-usual peak periods. When they actually want to use these APIs they have to subscribe to them so they have to be on-boarded as a registered third party with the bank. This system is very powerful for us, it is the best way that we know to show you, the customers, what your balance sheet is. That is what we call Transaction Risk Analysis (TRA). As banks face ever-increasing disruption and fierce competition, they are confronted with the age-old debate – buy versus build – as they assess their traditional front- and back-end platform architecture. %%EOF Having to go through all the authentication steps iteratively can lead to bad user experience. Currently, it supports the openbanking.org.uk, Berlin Group NextGenPSD2, and STET specifications. This is why a BIAN-based Enterprise Architecture is highly essential as we journey more and more towards Open and Embedded Banking interconnecting partners and FinTechs, not just in the Philippines, but also throughout the region". The central business activity is the transaction processing system which handles the money flow between the accounts. Different banks use different combinations of authentication factors from basic, SMSOTP, Vasco, fingerprint, voice, Facebook, Google, and more. Channel # 3. ���f��"K��B����/V�#�;�J+�������~/�_Ǩ��H�1�́. In the same way, the API developers of the bank need to have a proper way to create and version APIs and manage the lifecycle of the APIs that are exposed by the bank. Lorem ipsum dolor sit amet, consectetur adipiscing elit, article on Strong Customer Authentication, https://www.berlin-group.org/psd2-access-to-bank-accounts, https://www.accc.gov.au/focus-areas/consumer-data-right-cdr-0. Matt pulled us out of the tech stack for a second to focus on what's *beneath* it, the foundational layer of the application pyramid: business drivers. This article builds a theory of financial system architecture. So when the third party communicates with the bank with those credentials, the bank calls to the directory service, verifies the third party and allows access to the APIs. Here are some of the standards and specifications that different countries around the world follow: Considering all the above key requirements and how the different regions have met these requirements, we have created WSO2 Open Banking. These services carry out a number of functions such as validating customer data, viewing a transaction, or providing simple analytical services. %PDF-1.5 %���� The past two years have been notable for a move from borrowing via the banking system to borrowing from alternative sources (see part 1 of Chapter 1 and Table 1.2 for a more detailed analysis).6 Concurrently, the amount of credit extended by the banking system decreased appreciably, mainly due to said Dennis Omila, Executive Vice President and Chief Information Officer of UnionBank. In addition to all of the above requirements, an open banking platform should provide proper API management capabilities to both third parties and API developers of the bank. To identify what the key requirements of an open banking platform are and how they can be implemented, selecting the right technology is a top priority. Bank management system is a virtualization of transactions in banking system. But if a bank wants to expose account information of bank customers or needs to provide a service to make payments, those APIs need to expose as secured APIs. �Ft�gH.��d�~��b��.�(K!��o� V]�(��� O#z�� �*G��1�8d�,Ѣ�2`XL�; #�D�GI�H7��D�a�H�K��56�f֙^>S2A���N��b��X>[4�yg��t&Sy�� �S�W�#���<7���h��1}�E�ۆY��;�\�Ey��O%�!w�!f50׼��0n�tG!�k(��n�ʶk"+��4�>�?te��حP&��u��ͥR9D} ]}��j�[����h�d����B�Ʉэ ,�a1���%��ݿG�ƍ`���m���Z����ɢ�TW���q!�,����A���y`���#e(#��e�/o+6B1r�G9��h����5��(p�k�0����Np�B�+j�pn�ī�5)ygU��Q���D�=���b��y~�s����;TM���^�5��]�1MO�������`gyGw��lGL���F8w2�@�"��k�p ��M�6�7��dB,?09y� }r@�(D���@�UY۟b ��Qe����o��+nk��WZ�����r����:B֙�����&Y��+��� For the sake of anonymity, the article refers to the customer as Contoso Bank. These two layers are SOA (Service Oriented Architecture) based and Java compliant. Especially when considering stress testing, the bank should replicate the real banking environment and verify that the whole platform to provides an obstacle-free solution. The main services include receipt and payment of cash only. Banks can provide testing facilities to the third parties before their application goes live so that banks can identify and fix issues early. Banks always carry the risk of choosing the wring system design or … This type of diagrams is used in Component-Based Development (CBD) to describe systems with Service-Oriented Architecture (SOA). Since 1994 this bank had used banking systems implemented using distributed client / server technologies, which was quite unusual for banks at the time. So then the third parties can consume those APIs and generate new services to the bank’s customers. *2��0|�iq:;�sj�ã���Ĕ}� The traditional banking model is undergoing rapid and significant transformation fueled by heightened customer expectations, a raft of regulatory mandates, and the convergence of emerging technology with new business models that blurs lines between previously distinct industries. CSSE 377 – Software Architecture & Design II Software Architecture in Banking A Comparative Paper on the Effectiveness of Different Software Architectures Within an Financial Banking System JD Hill Andrew Robby Kruth Joe Salisbury Sam Varga 11/9/2010 Introduction Software architecture design is an important aspect of our daily lives whether we know it or not. 8/11/2020; 12 minutes to read +1; In this article. Read our Cookie Policy to find out more. The redirect approach and the decoupled approach are widely used authentication approaches in different countries. Some regions have introduced adirectory service to provide the third-party onboarding capabilities, where both third parties and banks come and register with the directory service and provide some credentials that can be used to identify the third parties. 206 0 obj <>/Encrypt 179 0 R/Filter/FlateDecode/ID[<42B6974E5A996E49B30F4F79E5AC6D60>]/Index[178 45]/Info 177 0 R/Length 131/Prev 845647/Root 180 0 R/Size 223/Type/XRef/W[1 3 1]>>stream Axxiome’s core banking services include deposit and loans functionalities and corresponding payment channel integration with the related reporting capabilities. When sharing customer data with third parties, banks need to get customer consent. Some countries have already taken the initiative to move towards open banking. Your open banking architecture plays a large role in determining how effectively you open up your APIs, provide a seamless third-party experience and ultimately offer a better customer journey than that of your competitors. So the open banking platform should be highly available and should perform at the same level even during the peak time or non-peak time. Revoking consent should be as easy as providing consent and the authority to revoke the consent should be available to the bank’s users. For example, ATM locations, branch locations, exchange rates, and interest rates can be exposed by means of open APIs. The flow can be changed upon request, for example, we can speed up everything if you want to launch software faster. So the open banking platform should have the capability to connect with any type of internal or external banking system. Everyone from your compliance officer to your open banking project manager to your CTO needs to have complete confidence in the open banking platform you choose. h�bbd```b``� ��A$c*�d��l�`��dV��������`YiV "�#A$g�d���&�A$w�d�b׀H�P��D��H�z��/����GL@�:����He��O }� We ask: what is a financial market, what is a bank, and what determines the economic role of each? Implementing a successful open banking architecture is critical for a bank to fully leverage the benefits of open banking. For example, if we look at the strong customer authentication and consent capturing flow, it should. ATM Channel of Banking: In simple words The ATM is known as Automated Teller Machine. ; Further, any change such as changing the infrastructure, software, or configuration, updating the whole open banking platform, fixing a bug, and publishing a new API version, may impact a third party's ability to deliver its services to their customers. System analysis is used to analyze and design any system. Our objective is to securely expose internal data and services to external third parties with customer consent via RESTful APIs. The bank provides an interface to customer care officers to search for and revoke the consent on behalf of the customer when the customer comes to the bank and asks to revoke the consent. There should be multi-factor authentication where at least a combination of two factors of knowledge, ownership, and inherence should be used. The ABC Banking Group focuses on delivering financial services to their clients. Further, they are 100% open source and fully extensible, so if your country has not defined any specification for open banking but your bank wants to have your own implementation, that can be supported via WSO2 Open Banking. ���yh�W�8P�� �"���f���2oO���=�j�W���uw��p��[Ʌ�n�\���KwP�>��$ġ����>��zq�Ǟ�l���kc��]��6�I�"����>���������O�#��凅'���%B(�-��1�cӡ(��sI��a��˶�i��r/(&�~�J�M����T`��W���E|���V\�»�����ٔ�w>J7����C�x1�y���i>�^[DoH����G+�͞K*��>��:$@����M���W��� c4�`�V���a:Y����A+�-&��w���Q�V�+m�+0qk52?�J�̑pU['�����aZ�d�{ ��(����`,*����1v/��*�y��g�R��nU1 h�G�b���ia^I�%k��M�t"������@��UWL��KŲu�s��D�~R�!R�쿑Z�B! Each bank had its own, user friendly interface, which helps its customers to interact with their account at their ease. There should be a capability to identify the risk level of a transaction and if it is low then the bank can exempt the user from having to go through all the authentication factors. *�-7r�����M���E�Dm��V�ʧ��z�*� �i�8α{@�B;�����w�+Nrcі����h٫�h\��Ч�g*z���XO�9��c=6�{�^�raN�H:�����^iJ�ш��8ְl��&Fz��..�#�9�'.dJ�h� ��Õ7�aBz�g�q�_�s�m�8ؑr������֖�A^�Yw�~XӳX In recent years, banks have tried to hot-wire aging systems to improve their performance, but that’s becoming an uphill struggle. In doing that, some banks provide a signup form where third parties can come and fill the form to get access. Some ancillary services like balance enquiry, cheque collection are also provided. endstream endobj 179 0 obj <>>>/Filter/Standard/Length 128/O('�~�����%E��;����[��R�/����:i�)/P -3388/R 4/StmF/StdCF/StrF/StdCF/U(�5�~�+��q�a�Ǭ )/V 4>> endobj 180 0 obj <>>> endobj 181 0 obj <>/ExtGState<>/Font<>/ProcSet[/PDF/Text/ImageC]/Properties<>/Shading<>/XObject<>>>/Rotate 0/TrimBox[0.0 0.0 595.276 841.89]/Type/Page>> endobj 182 0 obj <>stream Our article on Strong Customer Authentication provides more details. Common Business Banking job titles: Business Banker, Business Documentation Analyst, Commercial Banking Representative Common Commercial Lending job titles: Commercial Loan Officer, Commercial Banker, Commercial Banking Associate, Commercial Lending Analyst Common Investment Banking job titles: Business Banker, Business Documentation Analyst, Commercial Banking Representative Common Investment Management job titles: Wealth Advisor, Financial Advisor, Trust Officer, Wealth Manageme… Lenders in ancient Greece and during the Roman Empire added two important innovations: they accepted deposits and changed money. Architecture 1: When the bank provides the service directly to the customer The setup will have a web server, application server and the database at the bank’s premises. When considering the data that passes through an open banking platform, we can see spending patterns of bank customers and identify some business insights to improve the banking business. There can be different types of testing involved including integration, system, security, user acceptance, and stress testing. Bank API developers will not publish the API straightaway. bank staff who maintain this whole platform, bank users who use the products and services, and third parties who consume the APIs that are exposed by the bank and develops services. Additionally, different banks use different approaches to authenticating users. Banking business architecture starts with banking business capabilities model, and it is the basis for the digital transformation that banks the world over are embarking on. So having an effective problem resolution system is a must. Banking Case Study The banking case study in this series of real-world enterprise architecture projects was for an innovative regional bank. The user interfaces, emails, alerts, reports and error messages of the API calls should also provide better user experience and everything should be according to the standard which is specified by the bank. Banking System Data Flow -Context Diagram. Core Banking + Credit Card Architecture. Once the API specification is defined, and then exposed to the outside, banks need to think about how to restrict access to the APIs to authorized third parties only. They might need to test those APIs before exposing them externally. After the user is authenticated and provided with the consent - the user will be redirected back to the third-party application. We shall call this the mobile banking server for ease of understanding. Decoupled approach is where the bank user will not be redirected to the bank’s authentication portal, but the third party application identifies the user and does a back channel call to the bank saying the third-party application needs to get consent from this particular user. If the SLA is not met, there should be a way to escalate to the proper management. July 2020. In this report, the framework of system analysis and design, system design and system architecture for internet banking system are discussed. Third-party providers (TPPs) need to be able to rely on highly available and well-performing dedicated interfaces provided by Account Servicing Payment Service Provider (ASPSPs), so that they can, in turn, provide reliable services to their customers. When selecting the authentication approach or mechanisms, you should think about how it would affect user experience for the bank’s customers and whether it will conform with the trust that the customers already have with the bank. This proposed system overcomes the lacking of the existing manual system. These WSO2 products are well used and well tested with different customers and use cases around the world. The OLYMPIC Banking System's SOA technology allows the system readily to inter-operate with existing software and external networks. Further, we design architecture and UI/UX, develop the online banking system itself or upgrade existing modules, test everything, deploy, and support online banking solutions. Banks need to implement a security layer for exposed APIs. Banks can leverage this technology to create a successful open banking architecture thereby improving their customer services and banking business. For starters, there’s the core banking system, which drives daily activities like deposits, withdrawals, and loans. The bank also offers several web facilities aiding customers in account management. There’s now online banking to consider, as well as additional software for mortgages, treasuries, and investments. ��X�ܞs�;�G����kGk:���1��Q��(� X�(�b�|'�(�/��)�Z��]������6F? Bank staff and bank users already reside in different user stores, and we would need to provide a place to keep the third parties. (BIAN) is an independent, member owned, not-for-profit association to establish and promote a common architectural framework for enabling banking interoperability.It was established in 2008. These would improve the confidence of the third parties to use the open banking platform exposed by the bank. Service-oriented architecture (SOA) refers to the frameworks and processes that enable banking application functionalities to be provided as sets of services relevant to specific business functions. API analytics can help see how the exposed APIs are performing and how they can improve. Until recently, such replacements gave many CIOs pause, since the magnitude of the change translated into high costs and high risks. The concept of banking may have begun in ancient Assyria and Babylonia with merchants offering loans of grain as collateral within a barter system. Overview Our industry solutions provide the richest end-to-end banking functionality with model bank capabilities for over 150 countries.

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