Banking Software Innovations

Open Banking (OB) isn’t a feature - it’s the blueprint for banks to stay relevant in an APIsed economy. But exposing a few APIs is not innovation. Here's what really powers OB - and some myth busting. OB is reshaping how we access and interact with financial services. At its core, it’s about unlocking data and making it securely available through modern infrastructure rails called APIs. But the impact goes far beyond banking. OB is becoming the key enabler of today’s two most dominant business models: —   Platform economics —   Embedded finance Banks play a critical role in this shift - because they hold the data. Enter: 𝗢𝗽𝗲𝗻 𝗕𝗮𝗻𝗸𝗶𝗻𝗴 𝗔𝗿𝗰𝗵𝗶𝘁𝗲𝗰𝘁𝘂𝗿𝗲 This is the invisible technical foundation that allows banks to expose data and services to fintechs and partners. Here’s a simplified breakdown of key components: 1. API Gateway – The secure front door that handles requests and and routes them properly. 2. Consent & Identity Management – Ensures only the right parties get access, with the customer’s permission. 3. Authentication Layer – Uses secure login methods to confirm the customer’s identity. 4. Developer Portal – A gateway where third parties discover, test, and onboard to the bank’s APIs. 5. Microservices Layer – Breaks banking functions into modular services for faster, flexible delivery. 6. Core System Integration – Connects modern APIs to banks’ legacy systems without needing to rebuild everything from scratch. This isn’t just about technology - it’s about designing trust at scale. 𝗛𝗼𝘄 𝗮𝗻 𝗢𝗽𝗲𝗻 𝗕𝗮𝗻𝗸𝗶𝗻𝗴 𝗿𝗲𝗾𝘂𝗲𝘀𝘁 𝘄𝗼𝗿𝗸𝘀: 1.     A licensed third-party provider (TPP) sends an API request to the bank to access account data or initiate a payment. 2.     The end-user is redirected to the bank’s interface to authenticate and provide consent. 3.     Once consent is verified, the bank issues a secure access token to the TPP. 4.     The TPP retrieves only the authorized data or completes the payment transaction. 5.    All actions are logged for traceability, audit, security and compliance purposes. 𝗪𝗵𝗮𝘁’𝘀 𝗵𝗼𝗹𝗱𝗶𝗻𝗴 𝗯𝗮𝗻𝗸𝘀 𝗯𝗮𝗰𝗸? 1. Legacy tech – Many core platforms were never built for external connectivity. 2. Security & compliance pressure – Exposing APIs while meeting regulatory requirements is complex. 3. Real-time readiness – Open Banking requires real-time availability and minimal downtime. 4. Governance and ecosystem management – Managing third-party access and maintaining oversight is operationally demanding. Banks should avoid treating OB as just a tech upgrade or a compliance checkbox. It’s a strategic opportunity to modernize infrastructure - something they would have to do anyway. In the era of AI and real-time digital ecosystems, not being able to communicate via APIs is like owning a smartphone without internet access. Opinions: my own, Graphic source: Blanc Labs 𝐒𝐮𝐛𝐬𝐜𝐫𝐢𝐛𝐞 𝐭𝐨 𝐦𝐲 𝐧𝐞𝐰𝐬𝐥𝐞𝐭𝐭𝐞𝐫: https://lnkd.in/dkqhnxdg

Building an Open Banking Architecture 💡 In Open Banking, banks use an API messaging framework to securely share their customer data (with consent from customers) to third-party developers and service providers, which allows for automated and secure access to the data in their core banking environment. While Open Banking initially started as a regulatory requirement in the United Kingdom (UK) and other regions around the world, it has now transformed into a new revenue stream for banks, as they look to monetize their data and core functionality by exposing their core environment through APIs and building new business models such as Banking as a Service (BaaS) and embedded finance on top of the APIs. Open banking architectures supporting these use cases share the following characteristics: 🔹 Data is shared to third parties only after consent from the customer using OAuth 2.0. 🔹 Secure and limited third party access (with mutual Transport Layer Security (mTLS)). 🔹 API-driven infrastructure and an elastic and scalable environment. 🔹 Instant or near-instant access to customer account data. 🔹 Tamper-resistant logging and audit capabilities. Architecture description 1️⃣ A consumer accesses the licensed or accredited third-party application and provides consent to the third party to access consumer data or make a payment submission request. 2️⃣ Third parties in open banking can be defined as authorized institutions that provide value-added services in addition to the consumer's regular banking needs, such as accounts information (balance check, recent transactions, and statements) and payments (payment to merchants, people, and registered payees). This approach creates use cases such as spend analysis, credit decisioning, and payments for e-commerce transactions. 3️⃣ A trust service provider (TSP) is a trusted entity authorized by a supervisory government body to verify the authenticity of banks and third parties and issue digital certificates to third parties. 4️⃣ A bank's IT environment consists of its cloud environment and data centers. Source: Amazon Web Services (AWS) - https://t.ly/n6c1G #Innovation #Fintech #Banking #OpenBanking #EmbeddedFinance #BaaS #API #FinancialServices #Payments #Microservices #Cloud 

India's MSME sector is the backbone of the economy, contributing nearly 30% of GDP and 45% of exports. Yet, access to finance remains a key challenge, with many small businesses struggling to secure loans due to traditional risk assessment methods. This is where AI-driven credit scoring and financial analytics are changing the game. Banks and fintech firms are leveraging alternative data sources, including transaction history, GST filings, digital payments, and even social media activity, to assess creditworthiness more accurately. 🔹 AI-powered credit scoring – Moving beyond collateral-based lending, AI evaluates a business’s financial health using real-time data, enabling faster and more inclusive loan approvals. 🔹 Cash flow-based lending – Traditional credit scores often fail to capture the potential of MSMEs. AI helps lenders analyze cash flows, supplier payments, and inventory cycles to assess loan eligibility. 🔹 Fraud detection & risk management – AI models detect anomalies in financial behavior, reducing loan defaults and improving underwriting efficiency. 🔹 Customized financial products – Fintech platforms use predictive analytics to offer tailored loan structures and repayment plans, making credit more accessible. The impact? Faster loan approvals, reduced NPAs, and a thriving MSME sector that can scale efficiently. As India embraces digital transformation, data-driven lending is unlocking new opportunities for small businesses, driving financial inclusion and economic growth. 𝑯𝒐𝒘 𝒅𝒐 𝒚𝒐𝒖 𝒔𝒆𝒆 𝑨𝑰 𝒕𝒓𝒂𝒏𝒔𝒇𝒐𝒓𝒎𝒊𝒏𝒈 𝑴𝑺𝑴𝑬 𝒍𝒆𝒏𝒅𝒊𝒏𝒈 𝒊𝒏 𝒕𝒉𝒆 𝒏𝒆𝒙𝒕 𝒇𝒊𝒗𝒆 𝒚𝒆𝒂𝒓𝒔? #DataAnalytics #DataDrivendecisionmaking #AiinMSME #MSMElending

I know it's tempting... but loyalty programs don't have to be the default paint-by-numbers points, tiers, and refer-a-friend. Here are four interesting loyalty plays that have caught my eye in the past week. Adore Beauty Group changed its program from Adore Society to Adore Rewards to move beyond being online-only. Surprise, surprise, it included a quarterly gift box, but the differentiator to the MECCA Brands loyalty masterclass is that customers get to choose their products rather than it being a mystery. McDonald's partnered with Snap Inc. to allow MyMcDonald's users to redeem points for a month of Snapchat+. It's the first time they've done a digital subscription redemption. Very smart lifestyle integration and huge trial opportunity for Snapchat+. Costco Wholesale upgraded its top-tier Executive Membership. It costs $120 USD, but Executive customers can access the store one hour earlier than other customers and an hour later on Saturday. Plus 2% cash back. A brilliant combination of convenience with middle-class exclusivity. Walmart rewarded pre-orders of the Nintendo Switch by ensuring all orders were delivered by 9am on launch day... and included surprise Pringles and Cokes. At such a heightened and anticipated moment, that retailer has left an deep emotional footprint. So next time you think loyalty, don't settle for ordinary. Put yourself in your customers' shoes. Think outside of the normal. Create lasting value and impactful moments. Don't expect to turn tech on and loyalty to happen. If worse comes to worst... add Pringles to all orders.

Congrats to Joe Lu ✈️ and his team at HeyMax on raising US$11M to unify Asia's fragmented travel loyalty ecosystem. The round was lead by Peak XV Partners and is a signal that investors are betting big on infrastructure-layer solutions for the region's rapidly growing travel economy. The fragmentation problem they're solving If you're a frequent traveller in Asia-Pacific, you know the pain: points scattered across airline programs, hotel chains, credit cards, and merchants. Different expiry rules. Complex transfer ratios. Blackout dates. Value left on the table. HeyMax is building the connective layer to solve this. Founded in 2023 by four former Meta engineers, the platform aggregates loyalty earning and redemption across ecosystems using its own currency, Max Miles. Users earn across merchants and cards, then redeem across 30+ airline and hotel programs or convert to flights, hotels, and gift cards. The traction is impressive Since their US$2.7M seed round in July 2024: → 150,000+ users → 500M+ Max Miles issued annually → US$6M annualized revenue (5x YoY growth) → Acquired Hong Kong fintech krip for market entry Why this matters for APAC The regional loyalty market is projected to hit US$60 billion by 2029, yet over 75% of consumers struggle with fragmented programs. APAC passenger traffic now exceeds 120% of pre-pandemic levels. As Peak XV's Rohit Agarwal put it: "More than 40% of global card revenues, over US$100 billion, are spent on loyalty and rewards. HeyMax is using technology to turn that spend into actual consumption." What's ahead Expansion into Japan, Taiwan, and Australia by end-2026, plus deeper partnerships across airlines, hotels, and card issuers. Their AI features position them as programmable infrastructure for regional loyalty flows. The shift from "loyalty as branding" to "loyalty as infrastructure" is happening. This is worth watching. https://lnkd.in/gVA_FGDs

UK’s National Payments vision report offers a comprehensive roadmap for the future of payments, emphasizing the need for innovation, consumer protection, open banking, and regulatory alignment. The Vision responds to the findings of the independent Future of Payments Review 2023, led by Joe Garner (https://lnkd.in/gSMrMMCS) , and takes action to address key issues across the landscape. Key takeaways: 1. Technological Innovations - With more users relying on smartphones for their daily transactions, mobile banking enhancements are essential. This includes intuitive interfaces and seamless integration with other financial services. - The shift towards contactless payments has been accelerated by the pandemic, making it a cornerstone for future transaction methods due to its speed and convenience. - The growth of digital wallets offers consumers a secure and flexible way to manage their finances, supporting various payment methods and currencies. - The report explores the potential of emerging technologies like blockchain and artificial intelligence to further innovate and secure the payment landscape. 2. Consumer Protections - Robust security protocols are being implemented to protect consumer data from cyber threats and fraud. - Clear guidelines and protections are in place to ensure consumers have recourse in case of payment issues. - The report underscores the importance of transparency in payment processes, helping to build and maintain consumer trust. 3. Open Banking - The report outlines strategies to fully unlock the potential of open banking, offering consumers more choice and control over their financial data. - Secure and efficient data sharing between financial institutions is crucial for the success of open banking, enhancing competition and innovation. - Encouraging innovation through open banking can lead to the development of new financial products and services that better meet consumer needs. 4. Regulatory Framework - Regulatory alignment across different authorities ensures consistent oversight and management of the payments sector. - The regulatory framework is continuously updated to keep pace with technological advancements and evolving market conditions. - Collaboration between regulators, financial institutions, and other stakeholders is key to addressing challenges and seizing opportunities in the payments landscape. https://lnkd.in/gMdMEDiY #payments #banking #innovation #openfinance

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#FinTech | #Banking | #APIs | #Microservices : Ambitious #Fintechs took immediate, decisive steps to leverage #OpenBanking, winning market-share and customers over banks. Traditional banks ignored the opportunity to re-invent and engage in Open Banking markets, in many cases doing the bare minimum to comply. This has resulted in increasingly dissatisfied customers. What Holds Bank Back ? Most banks today operate with complex, unmanageable IT architectures, impeding speed-to-market for new products and services. Increasingly inflexible legacy systems have resulted in business silos and monolithic applications that hinder agility, adversely impacting the pace of key transformation initiatives. Core functions within a bank have traditionally been implemented as monolithic software applications. In the race to stay ahead and provide great customer service, banks embraced digital capabilities in a provisional manner, thus introducing further complexity into their underlying IT architectures. While the IT-systems within a bank implement multiple distinct applications, the business processes that banks need to implement to address changing customer requirements typically span multiple such applications. Because of this, each time a bank wishes to implement a new business process, it must engage in an integration project across multiple applications. Over time, multiple such integrations create the classical “spaghetti architecture”, resulting in problems of scalability, manageability, and cost. As the threat from Open Banking powered competitors continues, considerations have now evolved from ‘basic’ Open Banking to Premium APIs, Embedded Finance and Open Finance; to support all these use-cases, core-technology architectures need to evolve. The solution to scaling systems is to use existing banking applications (including core banking, AML, KYC and other monolithic systems) as databases of information (‘system of records’) and implementing banking business processes as APIs and Event-Driven Microservices that access these systems of records.

AIR Platforms raises $6.1M to modernize real-time credit intelligence with AI #AIR, an automated credit intelligence platform founded by Glenn C., has secured $6.1 million in seed funding to scale its AI-driven approach to daily credit evaluation. The round was co-led by Work-Bench Ventures and Lerer Hippeau, whose co-founder Jonathan Lehr stated that available credit-decision data has grown tenfold in the past decade while institutional systems have not kept pace. Built by veterans of Moody's Corporation’s, DataRobot, and Goldman Sachs, AIR aims to deliver real-time, bias-free credit assessments for both public and private companies. Its models train on decades of financial data and continuously re-rate companies as new information emerges. According to Carvajal, AIR can translate qualitative scenarios into quantitative metrics, enabling sensitivity analysis, stress testing, and complex assessments such as geopolitical risk impacts on corporate credit profiles. AIR reports that it supports financial institutions managing more than $4 trillion in assets and can reduce manual review time by 30 to 50 percent. The new funding will support product innovation, talent expansion, and strategic partnerships as lenders move toward AI-driven credit workflows. The article on Banking Dive in the first comment.

🚨 Deep Dive: How Zelle Scaled to $1.2 Trillion by Embedding Into Banking The Zelle network owned by Early Warning Services handled over $1.2 trillion in 2025 (20% growth) on roughly 4.2 billion transactions, far outpacing the 3–4% pace of U.S. consumer spending. Roughly 30% of that volume is payments to or from small businesses, underscoring Zelle’s role in everyday commerce. Banks are now expanding Zelle globally: in late 2025 Early Warning announced a stablecoin-based cross-border initiative “to bring speed and reliability” to international payments, to be offered on equal terms to all Zelle banks. Integration of Zelle typically means partnering with a sponsor bank or vendor (e.g. Alacriti’s Orbipay) and using ISO20022-based APIs. Key trade-offs include security and fraud: regulators note hundreds of millions lost to scams (CFPB cited ~$870M since 2017), while Early Warning touts that 99.95% of transactions have no reported fraud. Consumer protection laws (EFTA/Reg E) do not easily reverse Zelle’s instant transfers, so banks emphasize fraud mitigation and user education. For fintechs, the decision to integrate with or compete against Zelle hinges on infrastructure and strategy: partnering with a bank or fintech provider offers real-time P2P liquidity and access to Zelle’s 2,300+ FI network, but imposes network fees and compliance duties. Alternatives like FedNow (free real-time ACH), card-rail push payments, or crypto rails each carry different cost, speed, and risk profiles. In this article, I unpack integration options, technical flows, security/regulatory issues, and strategic product and go-to-market considerations. In short, Zelle integration can deepen customer relationships and expedite B2C/B2B payouts, but requires balancing irreversible payment risk against speed and reach. https://lnkd.in/eqm9PTT7