Developing PSD2 compliance and strengthening open-banking capabilities for a major digital financial solutions provider using key WSO2 technologies

Requirement

  • To identify the most suitable technical approach to develop Application Programming Interfaces (APIs) that are compliant with open banking and PSD2 standards
  • To demonstrate to an internal panel the approaches that will be taken to implement successful open banking capabilities along with PSD2 compliance.

Solution

  • Mitra Innovation developed a holistic open banking and PSD2 compliant solution for demonstration and review purposes
  • The solution utilises the following technologies:
    • WSO2 API Manager
    • WSO2 Identity Server
    • WSO2 Enterprise Integrator
    • Amazon Web Services Elastic Container Services (AWS ECS)
    • Docker.

Outcome

  • The proposed solution successfully matched expectations of the client’s internal board
  • The project is to scheduled to enter phase 2 – which is, development of the solution for commercial purposes.

Executive summary

2018 records one of the greatest changes the financial services industry has undergone in recent decades. On the directive of the European Union, traditional retail banking institutions will forgo advantages such as ownership of client information and monopoly over segmented financial markets. The revised Payment Services Directive 2 – also commonly referred to as PSD2 – will bring about changes to the financial industry. Such changes will open customers to third party service providers such as; other emerging financial institutions, financial services vendors and merchant retailers.

Whilst adapting to upcoming changes in the financial industry and positioning for leadership in the same industry, a leading digital financial services provider required a suitable digital solution that is flexible enough to accommodate the demands of open banking practices as well as, one that is secure and complies with the standards of open banking and PSD2 requirements.

The leading digital financial services provider – also the client in this case – have already experimented with other solutions providers but have not arrived at the desired, perfect solution.

Mitra Innovation pitched the near limitless capabilities of WSO2 technologies – as a middleware solution to bridge the gap between solution requirements and standards compliance – to the client and was requested to develop a demonstration-scale solution – for board reviewal – for presale and demonstration purposes.

Mitra Innovation assigned two expert middleware engineers to the case – to work in parallel – with two team members of the client’s team. The initial solution was developed in under four weeks and was successfully demonstrated to the client’s internal board. Following acceptance of the solution as one that matches open banking expectations and also as one that complies with PSD2 standards, the solution is currently being shifted to the next phase of development  – where deployment for commercial usage is necessary.

About the client

The client is a leading UK based software and services provider with specialities in the fields of delivering front-end technologies for large financial services organisation and customers of the same. The company also operates offices in Australia and Ireland. The company has been in operation for over 15 years, houses nearly 150 employees, and their current flagship product is an omni-channel financial services platform.

What was achieved

Mitra Innovation delivered initial proof of concept to enhance the client’s product roadmap. The solution was developed in three main phases, with objectives as follows:

Phase 1

  • To gain understanding of spike requirements
  • To develop Proof of concept (PoC) to illustrate Open-Banking readiness supported with a comprehensive sales demonstration

Phase 2 

  • To design and architect API Management and Identity Management for the client using WSO2 open source tools
  • To develop the proposed solution

Phase 3

  • To implement Open-Banking standards within the client’s existing products
  • Further integrations with the client’s platform that include various internal APIs

All activities were concluded within two work sprints (four weeks) and presented successfully to the client. Activities that were conducted during the two work-sprint sessions are as follows:

  • Gathering and study of requirements
  • development of PoC
  • sales demonstration
  • integration of  middleware components with client’s existing suite of products
  • embedding compliance with Open Banking and PSD2 standards within the solution
  • ensuring future-compatibility for future integrations for when necessary.

Technologies utilised

  • WSO2 API Manager – WSO2 API Manager is an open source enterprise-class solution that supports API publishing, lifecycle management, application development, access control, rate limiting and analytics in one cleanly integrated system.
  • WSO2 Enterprise Integrator – WSO2 Enterprise Integrator is a powerful, open source integration platform connecting to, and transforming data between legacy systems, SaaS applications, services, and APIs.
  • Amazon ECS – Amazon Elastic Container Service (Amazon ECS) is a highly scalable, high-performance container orchestration service that supports Docker containers and allows you to easily run and scale containerized applications on AWS.
  • Docker – Docker is an open platform for developers and sysadmins to build, ship, and run distributed applications, whether on laptops, data center VMs, or the cloud.

Secondary benefits of the solution

Due to the versatile nature of the technologies utilised,  proposed solution also delivers secondary benefits to the client such as:

  • Light-weightedness using advanced middleware integration tools and techniques, the solution does not demand for exaggerated  disk space requirements or computing power
  • Highly customisable using highly versatile open source middleware technology, Mitra Innovation engineers are capable of customising the solution at nearly on-demand basis
  • 100% open source technologies Using 100% open source technologies, Mitra Innovation was able to maintain project development costs at a minimal
  • Rapid Scalability Using Amazon Web Services (AWS) as a production environment, Mitra Innovation engineers were able to guarantee scalability of system processes
  • 24 x 7 support Mitra Innovation provides 24 x 7 support in three levels for its customers.

Conclusion – the way forward

Mitra Innovation is aiming to develop – on behalf of the client – a single payment gateway that allows entities operating within European Union (EU) jurisdictions, to make cross border payments as easily and as safely as the same entities would in their own countries. Furthermore, the solution also accommodates the requirement to maintain and not exceed transactional charges that domestic payments would normally incur.
To maintain compliance with Payment Services Directive 2 (PSD2) standards, the solution maintains secure communications whilst exposing customer accounts and transactional data to third parties, with the consent of the customer in concern.
While exposing the API interactions to open-banking standards, complex scenarios were managed efficiently and in a timely manner. Examples of complex integration scenarios are as follows: 

  • Transformations of services
  • chaining multiple services together.


Going forward – with the initial proof of concept successfully reviewed by the client’s internal review panel, Mitra Innovation faces the task of rolling out for the client – a secure, reliable, scalable and market-ready payment gateway solution that is compliant with PSD2 and Open Banking standards that is customisable for financial services providers operating in the European Union.

Ashok Suppiah
 CEO of Mitra Innovation

Our FinTech teams have demonstrated outstanding capabilities in using open source technologies to adapt to real world changes in policy and financial governance. Our success here proves that we are among the first technology innovators to deliver outstanding customer solutions whilst maintaining strict compliance with industry standards and governing bodies.

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