Knowing where to start when you need to choose an Open Banking vendor isn’t easy. Open Banking is evolving rapidly, so any platform you commit to must not only suit your ecosystem today but also enable you to flex in response to future developments.
If you’ve been tasked with evaluating Open Banking vendors for your enterprise, don’t fret. You’ll find all you need below, from the features to look out for in enterprise-ready Open Banking platforms to how to evaluate vendors to ensure they meet your specific needs.
What is an Open Banking vendor?
Let’s start with the fundamentals. An Open Banking vendor is a technology provider that supports the use of APIs to share data securely with financial institutions and third-party services. They do this by providing:
- API infrastructure capabilities, enabling you to build, secure and standardize APIs.
- Compliance and security, so you can meet regulatory and industry requirements relating to data access, data privacy, customer consent, authentication, audit trails, and the like.
- Integration capabilities to enable seamless connections between core banking systems and external fintech partners.
Some Open Banking vendors may also provide access to a marketplace of pre-connected third-party apps, enabling banks to easily enable these for their customers’ use.
Dive into this article if you want further details about what Open Banking APIs are and how they work.
Why do you need an Open Banking vendor?
Finding a trusted vendor that can deliver the capabilities mentioned above means you can tap into the rapidly growing Open Banking market. The idea of Open Banking is to improve competition, innovation and customer control in the financial services ecosystem. Providers such as Randolph-Brooks Federal Credit Union (RBFCU) are leading the field in terms of showing how this can benefit the end user.
With an Open Banking vendor in place, banks can provide APIs that share account, transaction, and payment data in a secure and standardized way. This enables third parties such as fintech apps, lending platforms, and budgeting tools to offer new and improved services to the end user, better supporting them to understand and manage their finances.
By using an Open Banking vendor, the bank doesn’t have to start from scratch in terms of building compliant APIs, authentication processes, and so on. As such, it can move forward in a much more fast and flexible manner than would otherwise be possible. The Open Banking vendor’s integration capabilities also support speed and efficiency, with interoperable and flexible features meaning banks don’t have to build and maintain integrations themselves.
How to evaluate Open Banking vendors
Let the evaluation commence! Follow these steps to ensure any vendor you assess meets your needs.
Define your enterprise requirements first
Your requirements will be unique to your organization. Enterprise-scale financial institutions, for example, will have different requirements to smaller banks and fintechs, due to their greater scale, complexity, risk profile, and so on.
A large bank will likely need to focus on data volume and complexity, the need to integrate with legacy systems, scalability, and a performance guarantee via an SLA (service level agreement), as well as concerns such as regulatory compliance, risk management, data security, and data privacy.
Cost and return on investment (ROI) will also be key requirements, as will alignment with long-term strategic goals. This means you need to have mapped out your enterprise Open Banking strategy and use cases before you start evaluating vendors. Otherwise, how will you align your chosen vendor’s offer with your strategic requirements?
Understand your regulatory and licensing alignment
When outlining your requirements, it’s critical to include the regulatory and licensing frameworks in your region. Compliance with PSD2, UK OB, CDR, or FDX will influence your choice of a standards-based Open Banking platform.
Define your security, consent, and data governance requirements
Regulated institutions must be explicit regarding their security, consent, and data governance needs. Regulation leaves no room for vagueness in these key areas, so it’s essential to map out what you need in order to comply with the relevant rules when sharing customer data via Open Banking APIs. Only once you’re clear on what you require in terms of how users authenticate and connect, how customers give consent, and so forth can you ensure that the vendors you’re evaluating meet your needs.
Examine API quality, standards support, and developer experience
When it comes to Open Banking vendor evaluation, look for a reliable, trusted vendor that is well reviewed on sites such as G2. The more transparent and usable the vendor’s platform is, the better, so look for developer reviews that dive into the detail of the options you’re comparing. A high-quality platform that makes it easy to secure and scale your Open Banking APIs, while also delivering superb developer experiences and robust customer support, is the gold standard here. A critical infrastructure decision of this nature is not the time to settle for anything less.
In terms of standards, look for a platform that supports open standards to ensure maximum interoperability. This will pay dividends into the future, as well as in terms of integration ease in the immediate term.
Consider coverage: Banks, products, and data/payment capabilities
Not all Open Banking providers offer the same capabilities. If you plan to work with a specific bank or fintech, be sure the vendor you’re considering will support every partnership you need. Ask them about their data and payment capabilities as part of this, including depth of data access and data standardization and formatting.
Discuss performance, reliability, and SLAs for mission-critical workloads
Whichever system you choose to meet your Open Banking requirements, it needs to be reliable, scalable, and secure. A worthy vendor will be happy to define your expectations in terms of reliability and performance via an SLA.
Consider integration with existing core banking, risk, and analytics platforms
Another important point when assessing Open Banking vendors is to consider integration with your existing systems. This goes beyond considering how to use an API with core banking systems for data access – it’s about interoperability with elements of your ecosystem such as your risk management software and your analytics platform. Vendor agnostic solutions that support open standards and integrate easily with a diverse range of systems will deliver maximum benefit here.
Assess vendor viability
How long have the vendors you’re considering been in business? How have they adapted to industry changes in that time? What do their vision and roadmap look like? These are all important considerations when it comes to Open Banking vendors’ operational resilience and viability. You need assurance that the solution you deploy today will still be going strong as the industry evolves further.
Evaluate pricing models, total cost of ownership, and contract flexibility
Pricing models can differ hugely, so be sure to consider not just the cost of the licenses you currently need but how prices will change as you scale. A model that penalizes you for growth is far from ideal. So is a vendor that requires your team to have too much specialist knowledge to work with them effectively, as this will limit the pool of talent available to you, driving up recruitment costs and/or your consultancy bill. Be sure to examine total cost of ownership (TCO) – not just initial price. Look out for fully featured free trials and guided proof of concepts, too.
It’s also important to consider contract flexibility. Are you locking into years of using just one vendor’s proprietary system, or can you buy in a modular system that’s customizable to your needs as these change over the years, and that gives you the freedom to avoid vendor lock-in and minimize technical debt?
Look ahead with roadmap, innovation velocity, and ecosystem partnerships evaluation
One further essential aspect of your Open Banking vendor analysis is looking at vendors’ future plans. Understanding where a vendor’s roadmap is heading, their innovation velocity, and the ecosystem partnerships that are likely to benefit your financial institution over the coming years is an important part of the decision-making process.
Building an evaluation scorecard and running RFPs and PoCs
Now you know what you want and what to look for, it’s time to turn that knowledge into a structured request for proposal (RFP) followed by a proof of concept (PoC), so that you can test the mettle of vendors who may meet your needs. You’ll need to build an evaluation scorecard, too.
Building the Open Banking vendor evaluation scorecard
Start with a simple vendor evaluation checklist covering core requirements, containing items such as:
- Vendor holds required regulatory licenses in each operating market (for example, AISP/PISP under PSD2 or Open Banking accreditation)
- APIs support SCA and comply with Regulatory Technical Standards
- Data encryption at rest and in transit (TLS 1.3 minimum)
- Documented compliance with GDPR, PCI-DSS, and other relevant regional standards
- Regular third-party security audits and penetration testing
- Defined incident response and breach notification procedures
- API-level compliance monitoring and automated conformance scanning
Then you can move on to building a scorecard that helps you evaluate vendors fairly. To do so, you’ll need to translate your requirements into objective scoring criteria, turning regulatory, performance, security, and integration needs into measurable categories. You’ll need to weight each criterion based on business impact, to ensure your scoring aligns with your mission-critical areas of focus. It’s also a good idea to define which criteria are mandatory and which are optional.
Be sure to standardize your template and scoring system so that you can use it for all vendors, covering their technical capabilities, compliance, developer experience, interoperability, scalability, pricing, and roadmap strength. Including scenario-based scoring, based on their performance in real-world use cases, can also be useful. You can assess long-term viability as well, looking at the vendor’s financial health, innovation velocity, ecosystem partnerships, and so on.
The final element is total cost of ownership. Score TCO for each vendor, incorporating licensing and scaling costs, implementation effort, support, and long-term operational and maintenance costs.
Running a structured RFP
For your RFP, you’ll need to ask vendors for detailed technical documentation and demonstrations of your actual use cases – real workflows, not generic demos. You’ll also need to validate regulator and standards alignment, requiring explicit responses on compliance with PSD2, UK OB, CDR, FDX, or whichever framework applies in your region.
Next, it’s time to assess integration pathways and implementation plans and timelines, and evaluate support models, SLAs, and escalation paths. You’ll also need to undertake due diligence on operational resilience, using the RFP to assess company stability, security audit history, certifications, and reference customers.
Use a multi-stakeholder evaluation committee when running your RFP, so that the needs and opinions of your technology, risk, compliance, security, and digital teams are all included, along with those of business owners.
Run controlled proof of concepts
Once you’ve shortlisted Open Banking vendors who score highly against your criteria, you can move ahead with a controlled proof of concept. This is your chance to validate performance, latency, developer experience, data quality, and integration complexity – it’s the final assessment stage before you can move ahead and award a contract with confidence.
Case examples and red flags when shortlisting Open Banking vendors
The final things to look out for when assessing and shortlisting Open Banking vendors are case examples and red flags.
Case examples
Ask the vendors you’re evaluating for real-world case examples such as:
- A large retail bank API rollout
- Regional credit union adoption
- Cross-border payment enablement
- Data analytics and personalization
- Fintech marketplace connectivity
Red flags
If you come across any of the following when evaluating vendors, it’s time to walk away:
- Opaque compliance posture
- Poor API quality
- Weak performance metrics
- Limited geographic or bank coverage in relation to your required markets
- Proprietary lock-in
- Slow innovation velocity
- Inadequate security practices
- Weak integration support
- Financial instability or unclear long-term viability
- Negative or inconsistent customer reviews
- A lack of recent audit reports or penetration test results
Any of these red flags should be enough to point you firmly in another direction.
Talk to Tyk about your Open Banking needs
Want to know more? The Tyk team is here to help. Talk to us today about your Open Banking needs.