Exploration of Barclays Bank's Digital Strategy for Open Banking

This report provides a comprehensive analysis of Barclays Bank's digital strategy, specifically focusing on its implementation of open banking. The introduction provides an overview of Barclays' global presence and financial services. The report then delves into the bank's adoption of variou...Read More

Exploration and Critical Assessment of the digital Strategy of Barclays Bank for Open
Banking.
Introduction
With operations in Europe, America, Australia, Asia, the Middle East, and Africa, Barclays
Group PLC is a prominent worldwide financial services firm. Retail banking, credit cards,
corporate banking, investment banking, and asset management are among his specialties
(Teodoru, 2017). Global Retail Business, Corporate and Investment Banking, and Wealth
Management are the two clusters, each having multiple business divisions. And there's a
group centre with all of Barclays' crucial assistance. Barclays Bank PLC, the group's 300-
year-old business, operates in more than 50 countries, employs 147,500 people, and recently
merged with the Absa Group of South Africa (Philips, 2018).
The Group's business model focuses on executing an integrated global banking strategy,
which is the most effective way to serve clients and maximise risk-adjusted returns for
shareholders. As a result, the Group transports, loans, invests, and safeguards the funds of
over 38 million consumers and clients across the world (Guo, 2017). With a benchmark ratio
of 11%, it is the world's third biggest bank by assets and one of the world's major financial
services companies. By market capitalization, it is the third largest bank in the United
Kingdom. In May 2005, the bank relocated from Lombard Street in the City of London to
One Churchill Place in Canary Wharf, London, UK (Martin, 2013).
In the United Kingdom, Barclays is a universal bank. Providing goods and services to people,
corporations, investment banks, credit cards, and wealth management in the United Kingdom
and the United States. Barclays operates in more than 40 countries and employs about 85,000
people, with a history and experience dating back over 325 years. For clients and clients all
throughout the globe, Barclays transfers, loans, invests, and safeguards funds (Martin, 2013).
With the explicit approval of the bank's clients, open banking gives registered third-party
providers (TPPs) secure and standardised access to their bank accounts. It was created to
increase financial services sector competitiveness and innovation. Banks have created an
industry standard application programming interface in response to regulatory restrictions
(API). This enables the TPP to create apps and solutions connected to traditional bank
financial goods and services (Plaitakis and Staschen, 2020).

The availability of standardised and secure APIs for open banking services has sparked a rise
of novel payment services on the market, resulting in the formation of an open banking
ecosystem. Although most of this innovation is geared at individuals and small companies,
enterprises are an important part of this ecosystem (Stam, 2015).
Banks in the UK and Europe have been steadily upgrading the Open Banking API's
capabilities, performance, security, and stability over the last two years. The bank has made
these APIs available on TPP and FinTech businesses' developer portals (Minofiev, 2017).
Before the introduction of the regulated service Open Banking API, many fintech companies
were active in the financial services industry, such as personal financial dashboards for
individuals or accounting services for small and medium-sized businesses that use account
balance and transaction data. They were often accessed through screen captures or automatic
downloads of data from banks. This FinTech player was a pioneer in the Open Banking API
(Minofiev, 2017).
Several large banks, including Barclays, have begun offering account consolidation services
to retail and corporate customers. These aggregation services allow customers to view the
balances and transactions of different bank accounts in one application instead of logging into
multiple bank portals (Neusa Pinto, 2017). Many FinTech businesses, especially those in the
international money transfer market, are beginning to offer new payment initiation services,
such as Faster Payments in the United Kingdom. As the need for real-time, on-demand open
banking services becomes more widely recognised, new business models are expected to
develop, providing new possibilities for all actors in the sector (De Jong and van Dijk, 2015).
Customers in the United Kingdom will have unprecedented control over their personal
information and how it is used with the advent of open banking. Customers will be able to
share their account transaction data with other organisations and make payments through
them starting in 2018. Through its open banking API, Barclays actively participates in this
movement, producing services that make it simpler for consumers to live and optimise their
funds. Please visit the Barclays API Exchange if you want to use Barclays with your API
(Leeflang et al., 2014).
Entrepreneurship, according to Barclays, is not only necessary for economic recovery and
success, but it also need outside collaboration. Talent and expertise are increasingly flowing

across corporate and geographical barriers. To put it another way, coming up with new ideas
and concepts, as well as developing new goods and services, will be fine (Godwin, 2011).
Banks, credit card companies, and other financial institutions must now disclose this
information securely with third-party providers, including FinTechs, who fulfil specific
regulatory requirements. All of this financial data sharing is made possible by a set of
computer programming concepts known as application programming interfaces (APIs),
which make it simple for these new financial services to "talk" to one another (Black et al.,
2020).
New technology trends adopted by Barclays Bank for online banking
This blog will discuss several new technology trends introduced by Barclays bank to enable
interaction between the bank and their money. This section covers:
1. Advanced self-service banking
2. APIs and banking
3. Biometrics
4. Enhanced cyber security
1. Advanced self-service banking
Barclays bank have been able to empower customers to be in control of their money and one
of the ways this have been done is through adoption of technology which help with self-
service banking. The use of self-service transactions happens on a regular basis, from
transferring money to checking balances online but technology now allows banks to offer
things such as:
a. Self-registration: Barclays allows customers who are new to the bank to open their
account straight from the Barclays App.
b. Loans: By using big data and machine learning, banks such as Barclays are able to
assess someone’s ability to pay back the loan, allow them to apply and take out loans
online.

c. E-signing: Complex products like mortgages can now be completed online, using
services such as DocuSign, meaning people don’t need to physically send paperwork
back and forth from the bank.
Barclays bank over the years, introduced effective techniques to enable prompt response to
customers. Times have changed, and so have customer’s expectations. It’s not enough to
expect customers to wait in line at branch and fill in forms. Adopting the self-service banking
have been cost effective for Barclays bank. Self-service has been enabled through the
introduction of Barclays app which enables transfer money between accounts and keep a
check on account balances. In fact, using its mobile app, Barclays raised the amount and
value of unsecured loans by 80% last year, with a third of unsecured personal loans
completed through Barclays digital channels, totalling £1 billion (Financial Times 2015). The
online banking is a form of self-service banking introduced that enables customers to do their
everyday banking tasks from their personal computer using the most advanced security
systems to keep details safe. Another aspect of self-service banking is the telephone banking,
which is available 24 hours a day, seven days a week. Customers can check their balance,
check transactions, pay bills and transfer money through the telephone banking method. The
last self-service method is the post office which enables all customers to withdraw or pay in
cash and check balances using their Barclays debit card and PIN at thousands of Post Office
branches across the country. All customers can also pay cheques into a Barclays account
using a personalised paying-in slip and a cheque deposit envelope. It will require two extra
working days for cheques to reach your Barclays accounts using the Post Office.
Barclays also excels at online customer connection and experience, which is another part of
digital channel management. The applications and services are rated 4 stars on the iOS and
Android markets, indicating that they meet and surpass the demands of potential consumers.
It's worth noting that less mature businesses tend to prioritise online client acquisition and
conversion above profitable objectives like retention and expansion (Chaffey 2010).
They were able to see that retail banking was transitioning towards an era of multi-channel
banking with a seamless movement across platforms and a more integrated experience for
consumers after examining the Barclays brand's cross-channel integration and development.
(TransformUK, 2015). It can also assist banks in cost-cutting by transferring sales from
branches to other digital channels. By criticizing Barclays' digital governance and change

management, they adapt better to technological change than their competitors (TransformUK
2015). This could ideally provide a competitive advantage in terms of attracting new and
younger customers as mobile banking will become the norm for other demographics in the
future. With this, rival banks can learn from efficient digital channel management is that
allocating appropriate resources to manage customer and market changes is critical for all
these operations. (Chaffee, 2010).
2. APIs and banking
Barclays bank to enable open banking, the use of APIs was adopted this enables connection
among individuals across the globe. People can also log into shopping sites with their social
media to booking holidays accommodation, flights, hire car all from the same site. For
Barclays bank to be able to do this, they use APIs (application programming interface).
The adoption of APIs, allows data to be sent from one service to another, allowing customers
to seamlessly access other third-party services. This is aimed at enabling customers of
Barclay banks more control over their personal data and who can use it. Barclays bank
through it open banking, have been able to connect with third party organisations to integrate
their services and products, speeding up time it takes to bring products to the market and
encouraging innovation.
3. Biometric technology
Barclays bank adopted the use of biometric technology in it banking activities. Even though
biometric technology has been widely used recently by smartphone makers, such as Touch
ID, voice recognition and iris recognition. Biometric technology are biological
measurements, providing potentially stronger security than passwords or PIN codes.
The adoption of biometric technology has enabled hundreds of millions of customers are
already using biometrics for mobile payments and the number could reach 1.5 billion by
2023, according to a report published last year by Juniper Research. At the same time,
customers around the world have grown accustomed to biometrics in a variety of other
contexts, including passports, national identity cards and voter registration.
Using biometrics instead of passwords means more security and less to remember, meaning
they’re being made more and more popular. Like other financial institutions, Barclays Bank

adopted biometrics as part of it open banking system to make customer authentication easier
but still secure. Barclays currently use biometrics with the Barclays App as well as a voice
recognition service to identify who you are using your voice.
While biometrics have already seen widespread adoption, further developments are in the
pipeline. Behavioural biometrics are a notable area of future focus. So far, biometric
techniques have focused on physical characteristics fingerprints, vein patterns and facial
characteristics. But there is also interest in exploring the possibility of validating users based
on behavioural patterns, including the rhythm of keystrokes on a computer. These factors
may be even harder to fake than physical biometrics.
4. Advanced cyber security
Another notable aspect of open banking adopted by Barclays bank is advance cyber security.
Fraudsters will continue to innovate their approach to online fraud and online banking
continues to be a lucrative target for fraudsters. One of the biggest methods currently to
access a victim’s account is through phishing; an email containing a link or attachment
pretending to be from a trusted source, so the victim gives away personal and banking details.
These details are then stolen and used to access their accounts.
Barclays bank adopted the use of rule-based systems to detect fraud. If certain criteria are
met, something is done. This can be an easy way to stop a lot of fraudulent transactions when
you already know patterns of fraud, but as fraudsters change their tactics and change their
patterns, rules alone cannot be relied on. For fraud detection technology to be effective, it
needs data. Lots of data. Banks and financial institutions use hundreds of pieces of
information to catch fraudsters. By analysing and knowing what’s usual for the account
holder, unusual transactions can be identified, and action can be taken.
Processing huge amounts of data can be expensive and labour intensive. Barclays bank have
adopted the use of machine learning. The bank has invested in big data analysis and machine
learning to process their data. For example, using big data and machine learning, Barclays
bank have been able analyse large volumes of transactional data and use machine learning
algorithms to spot patterns and unusual behaviour.

Through the adoption of open banking, Barclays bank have been able to encourage the
exchange of information and the use of FinTech banking data to produce new financial
solutions that are more competitive or suited to the demands of customers (financial
platforms, supplier payment services, credit checks, insurance, etc.) and, access to personal or
corporate financial data should also cut the time it takes to set up financial services
dramatically. Providers, for example, may authorise loans much more quickly and link
transaction data to accounting software. With these adjustments, there has been bigger impact
in Barclays bank operations which has presented a great potential for a range of technology
businesses to develop previously imagined products and services.
Benefits of Barclays bank Open Banking
The anticipated advantages are significant and extend beyond cash. Access to a more
transparent and customer-centric experience is gained by consuming retail financial goods
across markets. A notable example is how Barclays is leveraging an API to provide
comprehensive digital receipts to consumers and sellers in the UK, after a minority
investment in Flux's recent Techstars-backed Barclays Accelerator. Traditional and non-
traditional providers compete to address supply gaps and anticipate future consumer
demands, such as by offering loans to underserved clients.
Helping customers in their operations
The mode of operations of Barclays bank have changed with the introduction of open
banking, it enables customers to access answers and services matched to customer’s specific
needs. The combination of current and new APIs has simplified the process. All customers
needed is a computer and the ability to use it. Tasks are mechanised and turnaround time is
minimised.
The digital transformation of the banking sector
Barclays Bank has relied on traditional banking methods for a long time. For two centuries,
the physical construction of the bank followed the same metering approach. Integrated
banking technology, on the other hand, allows Barclays Bank to move away from traditional

systems and become community centres for their clients, and the use of open banking has
already begun to restructure their operations to become more digital and customer centric.
Centralization of services
With Open Banking, Barclays Bank has complete control over the services its clients require,
such as advising, loans, transfers, and financing. As a result, everything is done with better
transparency and under a single administration.
Increase in the financial market
As more clients join Open Banking, the number of APIs and services available expands. As a
result, there are different options tailored to everyone's needs.
Increased integration between financial institutions
Historically, Barclays Bank and other banks have functioned in silos, with little integration of
regulatory systems. As a result, the banking environment has become fragmented, making
interbank transactions problematic. However, improved access to financial data throughout
the sector has opened the door for closer collaboration among banks, regulators, and
technology suppliers. Customers may now monitor and manage their transactions through a
single centralised system, independent of their bank or technology supplier.
Reduced operational costs
Barclays Bank's digital transformation has enabled the bank to automate key areas of its
operations, such as account creation and closure, client engagement, fraud detection systems,
and financial compliance, allowing banks to reduce labor-intensive procedures and
expenditures.

Challenges of Barclays Bank Open Banking
Security is one of the most significant issues confronting open banking. Most open banking
champions are small FinTech firms, not tech behemoths like Apple and Google, and a lack of
uniform technical standards, such as certain security requirements, combined with complex
internal technology systems may make the process vulnerable to corruption and fraudulent
activity. It also makes it more difficult to determine who was at blame following a theft by
establishing complicated paths of data access.
Another issue with open banking is liability, because including third-party providers into the
banking process raises the danger of fraudsters obtaining access to consumer information and
funds. Consumers should have any losses replenished by their bank under open banking
unless there is reason to suspect fraud or negligence, but with both banks and FinTechs facing
increased security threats, it's inevitable that providers will try to blame a third party in the
absence of proper legal clarification.
Finally, a lack of education and understanding of open banking's possibilities has made
customers less inclined to consent to the sharing of personal data, restricting the capacity of
banks and FinTechs to develop. According to recent Accenture study, two-thirds of
customers would be unwilling to share their personal financial data with third-party
providers, while an independent consumer review agency showed in September that 92
percent of consumers had never heard of open banking. To counteract this, banks and
FinTechs must educate customers on how open banking can help them manage and control
their money, such as by monitoring expenditure and making smarter saving and investment
decisions.
As banks make their way into the digital age, they are opposed by a number of non-bank
actors, including fintechs, new pure-digital businesses, huge non-banks such as Amazon,
and technology suppliers. Each of them has begun to rewrite the rules of the financial
game and is establishing a new banking environment, putting banks on the defensive.
Fintech investments are increasing quickly over the world. From less than $2 billion in
2010, they are predicted to reach $150 billion between 2019 and 2021, reflecting the
market's faith in these agents' potential to usher about change.

Non-bank rivals who are tech-savvy are enticing clients by providing unbundled
financial services through creative, engaging, and enabling solutions. Banks that do not
confront this issue front on risk losing market share, increasing customer attrition,
margin pressure, and, last but not least, worries about information security and privacy.

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