The Role of IAM in Open Banking&

Where Do We Stand?Colombo IAM User Group - 2nd Meetup

Pushpalanka Jayawardhana

Financial Solutions Team - WSO2

“Banking is necessary; banks are not”

- (Bill Gates, 1990)

International Financial Industry

Concerns

➢Contribute to a more integrated and efficient European payments market

➢Improve the level playing field for PSPs (including new players)

➢Make payments safer and more secure➢Online shopping without a credit card➢Better protection against fraud➢Help lower charges for consumers on

card payments

Ref : https://www.pcisecuritystandards.org/pdfs/webinar_100519pci_pts_3.0.pdf

Payment Card Industry Security StandardsFor protection of cardholder payment data,

Payment Services Directive 2EU Directive that applies to all Banks operating in the EUthat regulates payment services throughout the EU, with a compliance deadline of January 2018

Open Banking1 : Possible central view

Banks expose their customer payment and account data, with customer consent, to Third party Payment Providers (TPPs) via APIs.

TPP

PISP/AISP

Bank A

Bank B

Bank C

Merchant

Now PSD2

Bank A

Bank B

Bank C

Merchant

Open Banking2 : No Involvement of Card Network

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➢ Less hops➢ Lower fees for transactions➢ Easy to track the path

Aggregated View of Accounts (AISP Flow)

Payment Flow (PISP)

Credits to Dinosoft Labs from Noun Project

Checkout Item

Login Page

2 Factor Authentication

Customer Consent

Initiationpayment info

1

2

3

4

PISP

302

5Token 6

Payment Complete

7

Settlement

PSD2 Compliance Requirements➢ API Specification

○ API Definitions

○ Secured API invocation

○ API Usage Monitoring

➢ Strong Customer Authentication

○ 2 Factor Authentication (SMSOTP, FIDO, Duo, MePin)

○ Adaptive Authentication

○ Consent Management

➢ Incident Reporting

○ Security Incident Reporting [Transactions affected,server downtime, Economic Impact, Reputational Impact]

Strong Customer Authentication

Ref : https://cdn-images-1.medium.com/max/1200/1*cqJ3MUF-vOG9IVTLOOQQTQ.gif

Ref : Accenture Payment Services & Accenture Technology Advisory, PSD2 & Open Banking Security and Fraud Impacts on Banks

Strong Customer Authentication Ctd..

Adaptive Authentication

➢ Authentication flow is defined by risk level

➢ PSD2 define several exemptions for SCA applications

○ Not to kill user experience for small transactions and bulk transactions

➢ Security level can be decided based on,

○ The amount of transaction

○ Time elapsed from previous SCA

○ Transaction patterns on user

○ Role of user - Cooperate or private

○ Location

Consent Management➢ Defined by PSD2 RTS on SCA and secure communication and GDPR

➢ Safeguard right of the user on personal data to,

○ be informed - Inform user of personal data collection○ access - Validate information processing at any time○ rectification - When user feels data is incomplete or accurate○ restrict data processing - Just store, don’t process○ data portability - Transfer data to another party○ forgotten - Request removal of personal data○ be notified on a data breach - Report to user within 72 hours

No Screen Scraping

Technology Requirements“Draft Regulatory Technical Standards, explicitly mentions to be based on known standards”● User authentication (with SSO)

○ SAML 2.0○ OpenID Connect

● Access delegation - OAuth 2.0● Fine grained authorization - XACML● Multifactor authentication - SMSOTP, FIDO, DUO, MePin

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Ref : https://www.abe-eba.eu/downloads/knowledge-and-research/EBA_May2016_eAPWG_Understanding_the_business_relevance_of_Open_APIs_and_Open_Banking_for_banks.pdf

Other Standards

ISO 27001 - for information security management systems

ISO20022 - remove ambiguity in messages relevant to payments, securities, FX, Trade services & Cards

Inside Story - Open Banking

DEMOWith https://openbanking.wso2.com/

Open Banking: The opportunities

Bank A

Bank B

Bank C

Merchant Bank A

Consolidated customer account and payment info across multiple Banks

TPPTPP

App Development

Ref : Deutsche Bank Global Transaction Banking - Payment Services Directive 2

1. One-leg Out – in EEA currency: EEA currency sent from the EEA to a non-EEA country

e.g. EUR payment from France to Sri Lanka

1. One-leg Out – in non-EEA currency: Non-EEA currency sent from the EEA to a non-EEA country

e.g. LKR payment from UK to Sri Lanka

1. One-leg in – in EEA currency: EEA currency payment sent from a non-EEA country to an EEA country

e.g. EUR payment from Sri Lanka to France

1. One-leg in – in non-EEA currency: Non-EEA currency sent from a non-EEA country to an EEA country

e.g. LKR payment from Sri Lanka to UK

PSD2 Impact

on Us

Banking Industry in Sri Lanka➢ Sri Lanka Interbank Payment System (SLIPS)

○ Same day electronic fund transfer○ Established in 2010, being first in South Asia

➢ LankaPay Common Electronic Fund Transfer Switch (CEFTS)○ For real-time payments○ Initiated in 2015

➢ JustPay - From LankaClear (pvt) Ltd○ Applies 2FA○ For real time retail payments under Rs. 10 000/=○ Central Bank of Sri Lanka (CBSL) approved security standards

➢ Have already thought on AISP like applications➢ Have the foundation of collaboration among banks in real time

JustPay© - http://www.lankaclear.com/product_service/42-overview

Ref : Accenture Payment Services & Accenture Technology Advisory, PSD2 & Open Banking Security and Fraud Impacts on Banks

Monetization of applications will be made easy...

Q & A

Twitter : @Pushpalanka LinkedIn : https://www.linkedin.com/in/pushpalanka/WSO2 Open Banking : https://openbanking.wso2.com/

Thank You!