Open Banking, FinTechs, and the Role of DevOps

Before the COVID-19 pandemic, a number of FinTech companies and other non-bank competitors were well on their way to outpacing traditional banks in providing the 24/7 convenience, tailored services, and apps that clients were demanding. However, as soon as the pandemic hit, banks were forced  to close their physical branch networks temporarily and advised customers to use digital channels instead. Concurrently, the majority of bank employees were required to work from home. According to Business Times, 70% to 90% of banking staff transitioned to remote work within days of government-imposed lockdowns, paving the way for  accelerated adoption of virtual communication.

The pandemic made it clear to the banking industry that there was an urgent need for digital transformation. Customers under stay-at-home orders required access to digital self-service tools to manage their finances. Much before Covid, the adoption of new digital technologies in the financial industry had been driven by regulatory changes such as the European Union’s Payment Services Directive 2 (PSD2). This directive mandates that banks allow third-party providers to access their customers’ financial data, enabling them to offer new services and products. The adoption of PSD2 has not only influenced the banking industry in Europe but has also spread globally, with many banks worldwide now utilizing it.

PSD2, which began in the European Union but quickly spread worldwide, has become a benchmark that many banks globally utilize, necessitating a thorough evaluation of how financial architecture must adapt. Australia, Japan, and other countries are also making strides in regulating banking data. This excitement has also prompted North and South American players to open up.

If you are considering banking with a technology firm  it’s important to know that banks are under pressure to become more software-savvy. They must use agile software development techniques that facilitate the deployment and upkeep of services if they want to remain competitive. In other words, they need to adopt a DevOps philosophy.

Banks have become programmable, and many are required to allow third-party authentication and access to payment, account information, fee details, and other data. This involves support for various integration methods, including SDKs, APIs, and OAuth for authentication, as well as documentation, sandboxes, and other developer tools. 

The Need for DevOps in Open Banking

1. Transforming agile theories into practice

Most banks have already adopted agile project planning and execution processes to keep up with the frequent business requirements that come with transforming banking experiences. Agile emphasizes delivering value to end-users in shorter time frames by creating applications in small, testable steps and collecting real-time feedback to course-correct before building upon each component. 

DevOps is a methodology that incorporates agile practices, with a focus on collaborative efforts between consumers, product management, developers, and QA to quickly advance toward a better product. DevOps recognizes that product delivery and how systems communicate with each other are crucial components of quality. Seen from this perspective, DevOps is an extension of Agile concepts, encompassing the fully delivered service for banks, fintechs, and other financial organizations.

2. The API Economy

The main principle of open banking is to let banks, fintechs, and other players in the industry share and process data within their ecosystems. A secure way to achieve this is through APIs. Hence, the birth of the concept of “Productizing APIs,” or API-as-a-product approach. For banks to remain competitive and leverage open banking, they need to treat their platform architecture and public gateways in the same tenacity as major tech enterprises like Google, Microsoft, or Amazon. They need to update, secure, and maintain their APIs, adhere to best practices, take iterative feedback, and follow agile methodologies to excel.  

For banks, microservices and related frameworks will go a long way to help reach open banking goals and maintain future regulations on API performance standards. However, this would need the uniting of iterative development, security, and operations processes, or essentially the Dev + Ops mantra for their APIs, 

3. Enhancing security with Infrastructure as Code (IaC)

Human error in IT poses the greatest security threat to financial companies. The more manual processes that are involved the higher the risk to your business. Agile principles are being implemented across all organizational levels to combat this. However, the IT department, which often relies on manual processes, can hinder operations, preventing Agile from functioning optimally.

Enter Infrastructure as Code (IaC) – a DevOps philosophy that automates numerous activities that previously required extensive IT personnel. This not only speeds up operations but also enhances security by eliminating human error at every step of the process.

Embracing IaC has proven to be a game-changer for many financial institutions. In fact, a European bank was able to reduce its IT infrastructure team by a whopping 45% after adopting standardized, automated infrastructure products, according to McKinsey.

4. Driving collaborations

As your company grows, it can become challenging to maintain a big-picture view of your processes. Artificial barriers and ineffective communication can slow down your IT operations, hindering your success. Enter DevOps, the solution to these issues. By breaking down silos between teams and promoting communication and frequent feedback, DevOps streamlines your operations and unleashes your organization’s true potential.

Barclays, a global financial giant, recognized the power of DevOps and implemented it as part of its digital transformation process. With DevOps, they reduced complexity in their codes and delivered services more efficiently, resulting in increased developer self-esteem and code quality. Following the lead of companies such as Barclays, one may consider implementing DevOps to enhance their organization.

Don’t let manual processes put your financial company at risk. Switch to Infrastructure as Code today and streamline your operations while improving security.

5. Automation

By implementing a basic pipeline that includes development, verification, deployment, and launch, teams can reduce the amount of security effort needed. All packages that go through the pipeline can be made compliant with financial regulations and security standards, providing peace of mind to players in the BFSI industry. Automation is at the core of high-performing teams in a DevOps culture. 

Most banks usually start by carrying out testing separately from development, but after realizing the value of automation and partnership, they move to automated testing and integrate it into dedicated DevOps teams. By standardizing and connecting integration, security, and performance testing to a Continuous Delivery pipeline, teams are gradually moving all testing into the development sprints. Today, more than 700 Agile teams in banking and other financial institutions follow continuous delivery practices thanks to DevOps.

Implementing DevOps in Open Banking

Automation in the form of robust CI/CD pipelines is the backbone of DevOps everywhere, irrespective of the industry. An end-to-end DevOps platform (also known as a software delivery platform) is required to achieve standardized agile processes for business teams and improve developers’ and Ops teams’ experience and efficiency. Having an integrated DevOps platform with built-in capabilities for agile planning, automation, and integrations allows teams to continue to use tools they find to be most effective while ensuring security and collaboration. 

By implementing DevOps with the help of these software delivery platforms, teams can orchestrate and automate all tasks, ranging from building, packaging, securing, deploying, and monitoring their modern banking applications and getting more control over their app updates and releases across geographies and user categories. 

They help mitigate risks from manual and repetitive tasks, and since data is generated and processed in one central point, it acts as the single source of truth for audit trails, governance, and insights. 

Automating CI/CD helps reduce the time and cost from development to production significantly, especially when done across multiple infrastructures and user bases. They help assess and improve DORA metrics, and to know more about these metrics, please read our other blog that details them. 

Benefits of DevOps in banking:

1. DevOps practices in BFSI accelerate the delivery process, enabling banks and fintechs to update and enhance themselves more frequently than those without it. Implementing a delivery pipeline and utilizing centralized repositories, managing secrets, automating CI/CD, and going cloud-native can unlock new functionalities and capabilities while promoting discipline. Simply put, DevOps streamlines the software development and delivery process.

2. DevOps is a vital aspect of software development for both banks and fintechs, especially when it comes to security. Since financial services deal with money and sensitive data, safeguarding them is essential by complying with the highest cloud security standards. 

DevOps practices, including development security operations or DevSecOps, play a crucial role in achieving this compliance. By incorporating DevOps for banks and fintechs, they can ensure that their software application adheres to the strictest security guidelines and standards, providing customers with a secure and reliable platform.

3. DevOps in banks and fintechs ensures minimal downtime and helps prevent substantial losses due to infrastructure failures. The financial services sector is highly competitive, and even an hour of unanticipated disruption can lead to high costs. DevOps presents a solution to minimize downtime by using fintech software applications that have a microservice architecture, allowing businesses to deploy customizable services with ease. This approach helps mitigate implementation difficulties and maintenance problems, making it a valuable tool for financial services companies.

4. In the BFSI industry, DevOps enables cloud support and availability. With the proliferation of gadgets, people expect constant access to financial services, products, and guidance through mobile apps. Cloud services can provide reliable 24/7 assistance and programs without needing to hire support staff or establish an extensive infrastructure.

DevOps practices can ensure that cloud-based SaaS platforms keep the application available and can auto-scale to handle the increasing demand based on changing consumption habits of customers.

Open Banking and DevOps on Ozone

To develop and run a secure modern banking application, aspects like authorization, data confidentiality, encrypted connections and assets, whitelisted channels, and secure private cluster deployments are a necessity. Over and above, audit and governance need to be stringent to keep pace with compliance requirements. 

An end-to-end software delivery platform like Ozone offers all these capabilities and much more. The idea is for banks and fintechs to start redefining the management and operations of a financial organization to adapt to some of the things that have made technology companies successful. This can only be done with a robust and powerful DevOps platform in place that has the capability to abstract away complexities and provide a fine layer of UI/UX for developers. Security and operations teams do what they do best without the need for manual orchestrations.