Setting the Foundation for Open Banking: Secure APIs and Valeyo

2021-05-11

The financial industry is evolving at a rapid pace, driven by changing consumer demand, significant advances in technology, and increased competition from both traditional banks and new financing entities.

With change, however, comes a wealth of opportunities to those willing to embrace it. And for credit unions to be competitive, they need to be able to scale and innovate quickly to retain and grow their member base.

As the industry shifts, Valeyo is at the forefront of these new challenges, investing in the critical technologies and tools to provide the security, flexibility and agility that credit unions need to meet the future – and their evolving customer expectations – head on.

Valeyo: One Step Ahead

Unburdened by legacy systems, Valeyo can pivot in ways that help institutions respond to the speed and breadth of change:

  • We are creating and building on secure APIs to help our clients enhance the personalization of their offerings
  • Our technology is cloud-native, so we can move and scale quickly and securely to meet an institution’s changing needs.
  • We are an agile company that is always ready to change tactics and services to adapt to the shifting landscape.

APIs and Open Banking are rapidly marking out uncharted territory for the entire financial industry. And with the playing field moving so quickly, institutions need proactive, future-focused strategy. Let’s look at the future of lending within the open banking ecosystem, how it is being influenced by APIs and how Valeyo is preparing for that future

Foundation for the Future: Secure APIs

Briefly, an Application Programming Interface (API) defines how different software components and applications should interact, communicate and share data with each other. A secure API model is one where the different applications used by different organizations can share data in a way that guarantees its security and privacy.

By using a secure API model for our new loan origination platform, Valeyo Ori, we are building foundational technologies for applications and websites used by its financial institutional clients to grow their ecosystems and platforms. With an API model, customer data can be shared in a secure way that allows for financial transparency, addresses privacy concerns, and improves the overall lending and consumer experience.

The proliferation of secure APIs in banking is impossible to ignore, and financial institutions who are not adopting APIs are missing out on new customer bases, revenue, technologies and market influence. For these reasons, financial service providers are quickly pivoting to the secure API model, which is now at the core of the current banking revolution, often referred to as Open Banking or consumer directed finance.

The Open Banking Revolution

Make no mistake in underestimating the coming change. A report by FinTech Futures from 2018 found that 77% of senior decision makers at financial institutions agree that Open Banking is a radical departure for financial services.

Open Banking is premised on the idea that digital banking is the future and, for it to be successful, information needs to be shared securely. To do this, the traditional barriers to access and share information – between financial institutions, data aggregators, application developers and consumers – need to be removed. 

Data shared within a secure API model allows FinTech, InsurTech and other third-party companies to build tools and services for the financial industry that they would not be able to otherwise;  develop offerings that are more personalized, intuitive and user-friendly; and ensure that every piece of data is properly protected. Driven to enhance the digital banking experience for everyone, institutions and customers alike, Open Banking promises better choices and more innovation across the whole industry.

And the revolution is well under way. Open Banking is already changing both the inner workings of financial service providers and how consumers engage with them. The results are clear: Open Banking has enabled better and more secure user experiences, afforded customers more control of their finances, streamlined lending and automated accounting, and introduced omnichannel lending and a host of new payment options.

For those institutions willing to embrace it, Open Banking offers increased revenue, more detailed customer insights and the power to offer a wide and robust range of personalized customer experiences, all done securely to ensure privacy. Open Banking is the future, and it’s already here. Valeyo’s API-based loans origination platform, Valeyo Ori, enables clients to be competitive in the space and deliver the customized, intuitive solutions customers demand.

Secure Data, Secure Trust

Trust is at the center of a credit union’s philosophy, mission and operations. They pride themselves on caring for their customers – and their customer’s data. Protecting this trust is paramount, and the idea of sharing data with outside partners can certainly raise questions; institutions need to be assured their partners have the right processes and policies in place to mitigate risk.

Valeyo takes security seriously and that is why it’s important for us to have security accreditation measures in place, to guarantee that the same trust placed in your credit union can be extended to the right partners for the right reasons. Security certifications like SOC 2 – issued when outside auditors assess an organization’s security, availability, privacy, confidentiality and processing integrity controls – are the bridge to building trust between financial institutions and third parties. Valeyo is currently conducting a SOC 2 audit for all security operations.

The SOC 2 certification will let clients and industry partners know that we have identified and understood the security and privacy issues surrounding data, and that we have enterprise-level policies and processes in place to review, access and respond to them.

Partnering for the Future

With API platforms defining the future of banking, it is critical for credit unions to have the right technology and tools in place to directly address and capitalize on the changes brought on by the digital transformation of Open Banking. However, given the breadth of these changes, credit unions will have a hard time growing, innovating and scaling their business if they go at it alone. With legacy systems that are process-heavy, risk averse and slow to pivot, credit unions can’t afford to isolate themselves if they want to grow, or even retain, their membership.

Instead of competing with developers, InsurTech or FinTech companies, credit unions should be ready and willing to partner with them. Organizations like Valeyo are well-positioned to help credit unions prepare for the opportunities of Open Banking. Armed with the right technology, market expertise and focus on partnerships, Valeyo is committed to building for the future by collaborating with its clients and the industry and developing innovative financial solutions that benefit institutions and their consumers.

By choosing the right partners, credit unions can enrich their own data and streamline it in a way that feeds directly into their larger financial ecosystem, providing an overall better customer experience and propelling them ahead of the competition.

Seize the Future, Now

Financial institutions, especially credit unions, need to ensure that customer data is protected, and Valeyo is one step ahead of the game. With our investment in innovative cloud technology and committed focus on customer privacy and security – front and center, at all times – the right data will go to the right people for the right purposes. Partnering with Valeyo affords your institution the best tools, the seamless experience and the peace of mind to meet the future, today.

To learn more about our API strategy and approach to data, security and compliance, download our Trust Centre Report.