By partnering with Token, Sberbank is signalling that it is fully embracing the opportunities of Open Banking. Briony Richter speaks to Marten Nelson, co-founder and CMO of Token, to find out how Smart Tokens can increase payment speed and convenience
The desire for faster payments has become global. This requires all organisations that process payments to meet that need without compromising on security; this is where Token comes in.
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Token is an Open Banking platform provider that supports banks transferring money and financial data, quickly and without friction.
To ensure enhanced security, Token deploys its Smart Token technology, which enables banks to transfer and receive payments as secure Smart Tokens.
Token CEO and co-founder Marten Nelson speaks to EPI about the benefits of Smart Tokens: “A Smart Token is a regular token on steroids. It transmits the value and all information needed to authorise the transaction together in one go, including enhanced counterpart identity and transaction and invoicing data.
“It consists of three layers: an asset, a set of rules, and a state. Smart Tokens are digitally signed by the account holder. This creates end-to-end secure transactions that are also non-repudiated.”
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By GlobalDataThe tokens create a near-infinite number of randomly generated values, which replace sensitive information like card details and numbers, making it almost impossible for hackers to get hold of the actual data.
Banks and financial organisations are waking up to the value of Open Banking and the important role that APIs play in an open digital environment. In order to compete effectively, incumbent banks now understand the need to expand their digital capabilities and build APIs. However, for some banks, building a platform that can foster an open API ecosystem can be difficult. This is why many have partnered with companies like Token to help them become PSD2-compliant.
Token is not only helping Sberbank in this area, but the bank will also harness the Token iOS and Android mobile apps. This will allow Sberbank customers to enjoy the benefits of Open Banking from their mobile devices.
Smart Tokens: Opportunities
Speaking about the opportunities of Open Banking, Nelson says: “Sberbank Slovenia is implementing Token’s transaction-based open application programming interface [API] for banking infrastructure. This ensures that its banking infrastructure is PSD2-compliant. As the platform is cloud-based, gives the bank both flexibility and scalability when handling transactions.”
Open Banking is certainly not going anywhere, and to establish a secure position within the value chain, banks and financial organisations should not turn a blind eye to its benefits.
Nelson continues: “Open Banking, if done right, will create a platform from which all players in the digital ecosystem can drive new propositions. A standard API would not just fulfil Open Banking requirements to move data and money, but also deliver extended payments and loyalty solutions that generate smart transactions.”
Nelson also adds that many banks are having problems finalising their compliance strategies and that the current strategy of using proprietary APIs does not fully embrace the opportunities to make a forward-thinking change in the transfer of money and data.
An open and single API that can support banks and developers will allow for positive interactions between all players in the market. Banks will witness growth through new open banking propositions, and will ultimately be able to deliver more personalised products and services to consumers.
Key trends
The potentials of Open Banking include greater financial transparency, significantly improved customer service, and positive collaborations, and the concept has been gaining momentum around the world. Nelson identifies some of the key trends:
- Bank direct payment: “This is something we are already seeing significant interest in, such as from Caxton FX and Paymentworld, and will lead to a newly efficient bank-to-bank ecosystem and dramatically enhanced real-time banking system.”
- Data aggregation: “What will be even more interesting is when artificial intelligence or machine learning are used to provide predictive analytics based on aggregated data to provide a better user experience [UX]. Banks that understand that they need to go beyond minimal compliance to true customer-centricity and embrace their role as custodians of customer data and value will offer a better UX.”
- Collaboration: “Partnerships will only continue to grow in importance. Those banks and third-party providers that are willing to partner with each other to get to market quickly will win by creating complementary solutions and a better UX that delivers value.”
Overall, Token’s platform allows banks like Sberbank to become PSD2-compliant swiftly and without friction. The potentials of Open Banking are substantial. It is companies like Token that want to encourage financial organisations to embrace all of its benefits.
