ArticleDigital Identity

Open Banking 3.0 – The Intersection of the Identity Metasystem and Digital Banking

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A white hot niche market opportunity lies in the intersection of ‘Self Sovereign Identity’ with the Open Banking trend.

Zaid Mahomedy of Chainstack explores this potential here.

He provides an excellent introduction to the Open Banking sector, and describes the primary concerns holding up adoption, notably data privacy concerns, and from this explores the role a permissioned Blockchain and Self Sovereign Identity (SSI) system could play in addressing them, through enabling a more granular control for users of how their personal data is shared

From OAuth to SSI

To dive to a detail level we can consider our Starling Bank case study, where it identifies how they are using the OAuth 2.0 protocol to achieve the integration with their catalogue of banking app plugins. (see from 43m:10s in this video).

As Timothy Ruff CEO of Evernym describes in this blog, Self-Sovereign Identity represents a further evolution again, a third generation of Identity-centric data integration where OAuth represents a second.

SSI could evolve this component part of inter-connectivity, enhancing Open Banking with more sophisticated capabilities in line with this generational step change improvement, what we could think of as ‘Open Banking 3.0’.

Early pioneers include the Barclaycard Payment Solutions (BPS) innovation team, who are partnering with Evernym to developed a passwordless authentication system, which director Ed Black describes will enable an entirely frictionless customer experience:

“You’re trying to pay for something but the details in the autofill tool are incorrect or need updating. By using your unique Sovrin identifier, you can share verified details and more – your card number, date of birth, passport number, address etc. – and automatically input those into the form.

“It’s a single-click system, totally under your control, which can significantly speed up customer transaction times and make life far easier and more convenient when buying online.”

They explore this in more detail on their own blog, and in this New Statesman article CIO Keith Little explains how this is part of building an innovative development culture, that is also seeing them adopt technologies such as Quantum Computing.

The Decentralized Identity Metasystem

The growing adoption of SSI will form what visionary Phil Windley describes as an “Identity Metasystem“, a global addressing system akin to what DNS facilitates for web domains but for user data, with the required governance administered by the Sovrin network.

Brave New Coin writes about how it will enable what the whole Internet has been calling for, entirely user-centric data portability.

While directives like PSD2 apply these types of principles to the banking sector, the technologies and data sharing principles required to achieve compliance are actually part of a broader ‘rising tide floating all boats’, an overall trend of an increasingly decentralized web catalyzed in particular by decentralized Identity.

Users want the same frictionless experience and control of how their data is used with each and every organization they interact with, from governments through social media sites. An Identity Metasystem will achieve this through a generalized evolution of the Internet to this end.

Therefore smart banking leaders, like Barclaycard, won’t seek out ‘silo’ solutions that work only for specific Fintech scenarios but will instead harness and become a part of this larger wave, giving them the flexibility and power to integrate with multiple partners across multiple use cases.

ACE

A great example of exactly this use case dynamism is ATB Financial in Alberta, who are advancing this type of ecosystem versus point to point approach. Led by visionary Mike Brown they are building ‘ACE’, the Alberta Credential Ecosystem, a local collaboration of organizations beginning to adopt SSI and achieve integrated services through sharing SSI credentials.

Although not necessarily doing so under a flag of Open Banking, are laying the foundations for exactly that and by doing so via Self Sovereign Identity, blazing the path as the world’s first Open Banking 3.0 implementation and reference model, one that can enable any permutation of integrated service across any corporate or consumer scenario.

The principle objective has been to form a collaboration network of local organizations, what Mike defines as a ‘multi-sided marketplace’, including universities, utilities, telcos, local and city government, to identify where they have intersecting business processes that would be well served through an SSI-integrated workflow.

Having modeled these scenarios they have then developed Proof of Concept prototypes. For example working with Telus, the local telco, they linked a banking credential to enable a new account opening process. With IBM and Workday they linked the other way, connecting a new employee onboarding process to payroll banking set up.

What this highlights is that both global and local collaboration is key. Where global ecosystems like Sovrin enable the core Identity data inter-operation, there is still a need for localized collaborations to operationalize these capabilities, even in the simple terms of building partner relationships through meet ups and workshops. From these comes the realization of how and where to apply the technology to best deliver mutually beneficial business results.

Starling Bank – Pioneering the Platformification of Banking

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