The flexibility in digital banking as a form of open banking has compelled UK-based banks to share important financial information in a secured and organised way. The open banking concept is designed to transform the way people handle transactions. It is three years since banks in the UK have adapted to digital transformation and Open Banking, but there’s speculation about how secure the transactions would be.
These speculations about the adoption of PSD2 and Open Banking solutions can be put to rest. If organisations must run an Open Banking Solution successfully, they must ensure the following,
- API must be tested to ensure that it can handle the failed instances by responding with proper status codes.
- Integrated touchpoints are tested to ensure uncovering of the bottlenecks, irrespective of the application and technology complexities.
- The input data like customer or account information, deposit data, loan information, transaction details, and real-time process details are accessed through an interface that must be thoroughly validated.
- The expected performance load of applications must be validated, which concerns the factors like response time, scalability, downtime, and infrastructure costs. It ensures that the system’s stability and performance provide expected results even during high traffic with optimal resource utilisation.
- The banking APIs must be validated so that the application performs with desired results. Authentication is important for ensuring the performance of APIs.
- Validation of internal standards for creating audit trails and reporting procedures are must to ensure that the TPP partners have permission to maintain compliance for the API integrations of the financial institutions.
Beyond these speculations and apprehensions, there are opportunities to explore.
What is Open Banking?
Through open banking, the consumers, financial institutions, and third-party service providers can access and control customer information, financial records and transaction data from the banks and non-banking financial institutions using application programming interfaces (APIs). The concept of open banking is redefining the BFSI industry and customer experience.
Even though consumers are a little apprehensive about sharing a massive amount of data in an open platform through APIs, due to a couple of things going wrong, the fact that open banking has the potential to enhance the consumer experience is definite. However, customers must allow banks to access and control their personal and financial data by signing the terms and conditions of sharing the details with the third-party service providers.
Features of Open Banking:
- Cash transactions are easy and convenient for the customers
- Transferring cash to several accounts, or credit cards is faster using open banking
- Checking the account balance of multiple banks on one platform
- Calculates saving and expenses automatically based on user’s transactional behaviour
- Combining all information of bank accounts and credit cards into a unified statement
- Better money management using an AI personal financial assistant
- Suggestions on saving for bills and insurance
- Access to bank information for calculation of accurate credit score
- Approval on loans and investment on a uniform platform
What is PSD2 and why is it now an integral part of open banking?
PSD2 Open Banking regulation implemented by the European Union. It is a regulatory directive initiated by the European Banking Association (EBA) and applies to European Union markets. The purpose of PSD2 is to make the payments and transactions easy, and banks must grant the rights to their customers to choose their payment partners to simplify the payment and transaction processes.
As PSD2 and open banking regulations have evolved to complement each other, and accordingly, open banking must also be compliant with all PSD2 directives. Open banking has now improved its scope by covering all payment products of PSD2 like Credit Cards, Debit Cards, e-Wallets, and more. Payments are likely to be fast and convenient through open banking solutions.
PSD2 and open banking serve as a uniform platform, eliminating various intermediaries such as merchant payment, payment gateway, Visa / MasterCard, issuing bank, acquiring bank, and others.
Features of PSD2:
- Opens access to payment information for third-party payment service providers
- PSD2 simplifies liability issues between the user bank and the third-party service
- The PSD2 improves consumer protection
- It eliminates the need for additional charges on payment methods
- PSD2 ensures strict protection of consumers’ financial data by meeting security requirements for electronic payments
How do testing and QA work for open banking / PSD2?
To access open banking, banks must create open APIs, which must comply with regulatory standards, security protocols, safe data transfer, compliance with all the directives, and more. With these and many more prospects, Open banking needs regulatory testing, penetration testing, integration testing, performance testing, and security testing to ensure end-to-end platform security.
As customers access and transfer sensitive information and data simultaneously via open banking, the platform requires API, accessibility, and more testing to ensure that the platform is up and running without any technical glitches.
As open banking continues to grow and all financial institutions operating in Europe and UK must conform to Open Banking standards, it would require the testing team to ensure that the APIs and the platforms perform without disruption. They would seek expert QA professionals with extensive knowledge of open banking landscapes. The number of financial institutions is growing globally, which eventually may have to comply with Open Banking/PSD2. There is a greater possibility and opportunity to expand QA solutions far and wide.
Yethi’s role as QA testing partner for Open Banking / PSD2
Yethi is a reliable manual, and automation testing partner focused on the banking, financial and insurance sectors. We offer functional, non-functional and test advisory services including acceptance, regression, integration, performance, vulnerability assessment and penetration testing, and data migration. We have a well-managed Test Centre of Excellence by expert consultants who also offer tailored business process engineering.
An automated API provides intelligent, reliant, and seamless API testing to reduce testing costs and test-cycle time. Yethi no-code software automation testing solution, Tenjin is PSD2 and Open Banking ready. Its Oauth2 can work with the security and authentication standards currently in place. With its ease of use, Tenjin can test across your internal or on the sandbox environment. With multiple upstream and downstream integration points, Tenjin is ready for REST API.
Tenjin is built to be programming free and allows the functional testing teams and the system developers to test applications, making Functional, UI / UX testing, API testing and UI based business process testing easy and hassle-free. Our 5th generation codeless automation testing tools automate testing at the API level, enabling granular and faster test cycles in a multi-system environment; thereby facilitating early test adoption in today’s agile world.
Tenjin is an advanced automation suite, which can streamline API-level testing needs by rapidly switching between API and the GUI. We provide comprehensive regression testing in integrated environments to ensure a balance solution of agility and practicality.