Buy Now, Pay Later (BNPL) has emerged as one of the fastest-growing innovations in digital consumer finance, transforming how short-term credit is delivered at the point of sale. By embedding installment lending directly into online checkout systems, BNPL providers have reduced friction in retail payments while expanding access to short-duration financing. Between 2019 and 2023, BNPL loan originations increased from 19.8 million to 335.8 million transactions, with total lending volume reaching $45.2 billion in the United States alone. This rapid adoption signals a structural shift in payment behavior, particularly among younger consumers who prefer flexible alternatives to traditional credit cards.

Despite its advantages including improved purchasing flexibility and higher retail conversion rates BNPL also raises regulatory concerns related to transparency, consumer indebtedness, and credit oversight. As fintech platforms continue integrating lending into digital commerce environments, BNPL is becoming a central component of embedded finance and an increasingly important area of study for future financial technology professionals.

Introduction

Financial technology continues to redefine the structure of modern payment systems by integrating credit services directly into digital platforms. One of the most influential developments within this transformation is the rise of Buy Now, Pay Later (BNPL), a short-term installment financing model that allows consumers to make purchases immediately while spreading payments over time. Unlike traditional credit cards, BNPL services typically operate through simplified approval processes and are embedded directly within online checkout environments, making access to credit faster and more intuitive.

The expansion of BNPL services closely follows the growth of global e-commerce and changing consumer expectations regarding payment flexibility. Regulatory evidence shows that BNPL loan originations increased from 19.8 million transactions in 2019 to 335.8 million in 2023, while total lending volume rose from $2.7 billion to $45.2 billion during the same period. These trends highlight the increasing role of installment-based financing within everyday retail transactions (Federal Reserve, 2025).

Understanding the BNPL Model

BNPL is a short-term installment lending mechanism that allows consumers to divide purchases into smaller payments over several weeks or months. Most BNPL arrangements follow a “pay-in-four” structure, where consumers make an initial down payment followed by three additional installments at fixed intervals.

The core BNPL lending interaction involves three primary participants:

• the consumer

• the merchant

• the BNPL provider

Once a consumer selects BNPL at checkout, the provider pays the merchant immediately while collecting repayments from the consumer over time. This structure benefits retailers through guaranteed upfront payment while improving purchasing flexibility for customers.

Unlike traditional lending systems that rely heavily on credit history evaluation, BNPL providers frequently use automated digital risk-assessment tools. This allows approvals to occur within seconds, demonstrating how fintech platforms are embedding credit directly into commerce environments.

BNPL Transaction Ecosystem

Figure 1 illustrates the Buy Now, Pay Later transaction ecosystem, highlighting the interaction between customers, merchants, BNPL providers, banks, and payment service providers within a digitally embedded credit infrastructure.

In this ecosystem, the BNPL provider acts as the intermediary lender that pays the merchant at the point of purchase while collecting installment repayments from the customer over time. The merchant benefits from immediate payment confirmation and reduced checkout friction, while consumers gain access to short-term financing embedded directly within the purchasing process.

Banks play a supporting role by providing settlement accounts, liquidity infrastructure, and regulatory compliance frameworks that enable BNPL providers to operate within established financial systems. In many cases, partner banks also assist with underwriting support and transaction authorization across card networks.

Payment service providers facilitate communication between merchants and BNPL platforms by enabling checkout integration, transaction routing, and authorization processing within digital payment environments. These providers ensure that installment payment selections can be executed seamlessly during online transactions.

Within the BNPL ecosystem diagram, solid arrows represent direct financial payment flows between participants, while dashed arrows represent supporting infrastructure relationships such as settlement processing, authorization routing, and platform integration services performed by banks and payment service providers.

Growth of the BNPL Market

BNPL adoption has accelerated rapidly over the past five years, reflecting broader shifts in consumer payment preferences and digital retail expansion. Regulatory data show that BNPL lending volume grew dramatically between 2019 and 2023.

This growth reflects increasing integration of installment financing into digital retail platforms. In 2023 alone, approximately 53.6 million consumers used BNPL services, representing a 12% increase from the previous year (Federal Reserve, 2025).

Additionally, usage intensity is rising. The average number of BNPL loans per consumer increased from 5.7 loans in 2022 to 6.3 loans in 2023, while annual borrowing per user rose from $745 to $848. These figures indicate that BNPL is evolving from an occasional payment tool into a recurring financing method.

Major BNPL Providers

The expansion of the BNPL ecosystem has been driven primarily by fintech firms embedding installment lending into online retail platforms. Leading providers include Klarna, Afterpay, Affirm, and PayPal.

These firms illustrate how fintech platforms are reshaping credit delivery by embedding financing directly into checkout systems.

Benefits of BNPL

BNPL services provide several advantages for consumers and merchants within digital commerce ecosystems.

First, BNPL improves purchasing flexibility by allowing consumers to spread costs across multiple payments without incurring interest when repayments are made on time.

Second, retailers benefit from higher conversion rates and increased order values. Industry payment research shows installment payment options reduce checkout abandonment and encourage larger purchases (Worldpay, 2024).

Third, BNPL expands financial access for consumers with limited credit histories. Because approvals often rely on alternative risk-assessment methods rather than traditional credit scoring systems, BNPL can support broader participation in digital commerce.

Finally, usage data indicate growing consumer engagement with installment financing. The average number of BNPL loans per user increased by 11% between 2022 and 2023, demonstrating increasing reliance on flexible payment structures (Federal Reserve, 2025).

Risks and Challenges

Despite its advantages, BNPL introduces several financial and regulatory concerns.

One major risk involves overextension of short-term borrowing. The convenience of instant approval can encourage repeated borrowing across multiple providers, increasing the likelihood of repayment stress.

Regulatory data indicate that 4.1% of BNPL loans incurred late fees in 2023, highlighting potential repayment challenges among some users (Federal Reserve, 2025).

Another concern involves transparency. Unlike traditional credit products, BNPL agreements are sometimes perceived as payment tools rather than borrowing arrangements, which may reduce consumer awareness of financial obligations.

Although default rates remain relatively low with charge-off rates declining to 1.83% in 2023 continued market expansion increases the importance of monitoring credit risk exposure (Federal Reserve, 2025).

Future of BNPL in FinTech

BNPL is expected to play an increasingly important role within the broader embedded finance ecosystem. As fintech platforms integrate lending services directly into digital marketplaces, installment financing is likely to become a standard checkout feature rather than a niche payment option.

Future developments may include:

• integration with digital wallets

• expansion into subscription commerce

• use of AI-driven credit risk assessment

• stronger regulatory oversight frameworks

As competition intensifies, providers are also diversifying beyond short-term installment lending into longer-duration financing products and hybrid credit solutions.

Conclusion

BNPL represents a structural shift in how consumer credit is delivered within digital commerce environments. Rapid growth in loan originations, increasing user adoption, and deeper integration with online retail platforms demonstrate that installment-based financing is becoming a permanent component of modern payment systems.

While the model improves purchasing flexibility and expands financial access, it also introduces new regulatory and behavioral challenges that require careful oversight. For fintech professionals and students, BNPL provides a valuable case study in how technology is transforming credit delivery, reshaping consumer behavior, and redefining the boundaries between payments and lending in the evolving financial ecosystem.

References

Worldpay. (2024). Global Payments Report 2024. https://www.worldpay.com/global-payments-report

Board of Governors of the Federal Reserve System. (2025). Economic Well-Being of U.S. Households in 2024. https://www.federalreserve.gov/publications/files/2024-report-economic-well-being-us-households-202505.pdf

Consumer Financial Protection Bureau (CFPB). (2023). The Consumer Credit Card Market Report. https://files.consumerfinance.gov/f/documents/cfpb_consumer-credit-card-market-report_2023.pdf

Consumer Financial Protection Bureau (CFPB). (2023). Consumer Use of Buy Now, Pay Later.
https://files.consumerfinance.gov/f/documents/cfpb_consumer-use-of-buy-now-pay-later_2023-03.pdf

Bank for International Settlements (BIS). (2023). Buy Now, Pay Later: A Cross-Country Analysis. https://www.bis.org/publ/qtrpdf/r_qt2309x.htm

Back to Homepage

This article highlights that digital capability is now a primary driver of customer loyalty, a point which is reinforced by an upcoming research report from MasterCard which found the “76% of consumers say they would switch their financial services provider to gain access to digital tools that make managing their lives faster and easier”. For organizations looking for growth, open finance offers a clear path forward by offering open standards-based secure, consent‑driven data sharing across the financial ecosystem. The article urges businesses to embrace open finance by building trusted partnerships and designing experiences that put customers first.

The full article is available at https://fintechmagazine.com/news/open-finance-on-business-agenda-for-2026

Back to Homepage

In this article we introduce Sossy, a secure open-source software supply chain project. We describe the first component of this project, the Sossy-crawler, a dependency graph generator for Linux executable (ELF) files and shared library object (.so) files. This is an extension of an earlier article titled “A Framework for a Secure Open-Source Software Supply Chain”. We plan to release Sossy as an open-source project on GitHub.

The Sossy-crawler

Sossy-crawler was written using the bash scripting language and it depends on five other open-source utilities and applications – Objdump, sed, lddtree, Graphviz, and PostgreSQL. The Sossy-crawler takes an input a list of files to be analyzed or a directory such as /usr/bin or /usr/sbin. It then builds a complete dependency graph for each application, as well as a graph of all the applications. The dependency graphs are directed graphs (digraph) and may be output as simple digraphs or weighted digraphs where the edges are labeled with frequency of source to sink calls.

Next, we present some outputs as simple and labeled graphs of the Sossy-crawler for the following applications: mysql, dockerd, apt, apache2, nginx, python3.12, and git running on Ubuntu 24.04. The parent application nodes have a green fill.

The simple and weighted graphs for mysql.

Figure 1 and Figure 2 show that mysql has 13 direct dependencies and 11 transitive dependencies that finally depend on libc.

Figure 3 shows that python 3.12 has 4 direct dependencies: libc, libz, libm and libexpat; and the last three depend on libc.

Figure 4 shows that dockerd has 13 direct dependencies and 15 transitive dependencies, and all components in this dependency relationship depend on libc.

Figure 5 shows that apt has 10 direct dependencies and 17 transitive dependencies, and all components in this dependency relationship depend on libc.

Apache 2 is a widely used, open-source web server software. It was developed by the Apache Software Foundation and is designed to run on a variety of operating systems such as Windows, Linux, and macOS1. Figure 6 shows that apache2 has 7 direct dependencies and 7 transitive dependencies, and all components in this dependency relationship depend on libc.

nginx ("engine x") is an HTTP web server, reverse proxy, content cache, load balancer, TCP/UDP proxy server, and mail proxy server2. Figure 7 shows that nginx has 6 direct dependencies and 5 transitive dependencies, and all components in this dependency relationship depend on libc.

Figure 8 shows that git has 3 direct dependencies and 2 transitive dependencies, and all components in this dependency relationship depend on libc.

Discussion

From the graphs above the criticality of the GNU C library (libc) becomes obvious as all other nodes have a dependency on this node. If this node is compromised, it can have an impact on all other applications and shared libraries. According to the Common Vulnerabilities and Exposures (CVE™) Program, here are some recent vulnerabilities to this library.

• CVE-2025-15281 (2026): A DoS vulnerability in wordexp affecting versions 2.0 to 2.42, causing process abortion due to improper flag handling.

• CVE-2025-4802 (2025): A local privilege escalation flaw in versions 2.27 to 2.38 allowed attackers to load malicious libraries via LD_LIBRARY_PATH in setuid binaries.

• CVE-2024-2961 (2024): A buffer overflow in the iconv() function, affecting versions 2.39 and older, allowing potential remote code execution (RCE).

• CVE-2023-6246 (2024): A heap-based buffer overflow in the __vsyslog_chk function, leading to local root privilege escalation. This issue affects glibc 2.36 and newer.

It is obvious that we have quite a number of important applications such as the ones analyzed using Sossy-crawler that are heavily reliant on libc despite the fact that libc has well-known and published vulnerabilities. There are even older vulnerabilities such CVE-2017-6509 (Heap Overflow in glibc), and CVE-2019-19126 (Potential for Buffer Overflow) that may be present if using unpatched versions of libc. An important improvement to Sossy-crawler is to report more information to include, supplier name, component name, the component version, dependency relationship, author, etc. One recommendation would be to follow the NTIA minimum requirements (Halbritter and Merli, 2024) for SBOM tool output3.

Conclusion

In this article we introduced the Sossy, a secure open-source software supply chain project. We discussed the Sossy-crawler, which is the first component of this project.

The Sossy-crawler allows us to create complete dependency graphs for ELF-based applications and shared objects. This can be used to study the impact of one node across different applications and shared libraries. The weighted versions of the dependency graphs allow us to evaluate the criticality of certain paths and nodes.

Next, we proceed to do more detailed network analysis using these digraphs for upcoming research articles based on this work.

Back to Homepage

Real-time payments are redefining how nations connect people, money, and technology. They mark a shift from traditional financial systems to digital frameworks that promote access, transparency, and speed. Emerging economies like India and Brazil show that when payment systems are treated as public infrastructure, innovation and inclusion can grow together. Their success lies in clear regulation, strong central bank leadership, and open-access models that make digital finance simple and universal.

Developed markets, in contrast, face hurdles from legacy systems and fragmented policies. Despite strong private innovation, the absence of unified strategies has slowed progress. This reveals a key lesson—modernization in finance depends as much on coordination and governance as on technology itself.

Globally, the future of payments is moving toward one standard: open, interoperable, and inclusive networks that connect economies in real time. Nations that build systems around these principles will not only modernize payments but also drive broader financial empowerment and economic resilience.

Global Trends and Policy Insights

• Real-Time Payments (RTP) as a Global Trend: RTP and account-to-account (A2A) systems are redefining financial infrastructure worldwide, enabling instant, secure, and transparent fund transfers.

• Emerging Economies Lead Through Policy and Inclusion: India’s UPI and Brazil’s Pix exemplify how government-backed, zero-fee digital infrastructure can achieve mass adoption, financial inclusion, and socio-economic impact.

• Developed Markets Face Structural Barriers: Despite advanced technology, countries like the U.S. and U.K. encounter slower RTP adoption due to legacy systems, fragmented governance, and market-driven incentives.

• Centralized Governance Accelerates Adoption: Public-sector-led initiatives with mandatory participation, mobile-first infrastructure, and interoperable APIs facilitate rapid innovation and high user engagement in emerging markets.

• Private-Sector Innovation Complements Public Infrastructure: Fintechs and technology providers such as Plaid, TrueLayer, and Stripe accelerate RTP adoption by integrating A2A capabilities, supporting both consumer and business ecosystems.

• Population Dynamics and Network Effects Matter: Large populations in emerging economies create network effects, supporting billions of monthly transactions and enabling digital credit scoring, lending, and broader financial services.

• Cost and Accessibility as Key Drivers: Low or zero transaction fees significantly boost adoption in emerging markets, while moderate fees in developed economies create adoption barriers despite higher income levels.

• Future of RTP Includes Cross-Border Interoperability: Projects connecting UPI, Pix, and EU Instant Payments are setting the stage for regional and global RTP corridors, programmable payments, and automated settlement systems.

• Policy Implications: Sustainable RTP systems rely on treating financial infrastructure as a public digital good rather than a purely commercial tool, balancing innovation, inclusion, and regulatory oversight.

• Emerging Economies as a Model: Developed markets can learn from emerging economies by prioritizing centralized coordination, interoperable systems, and cost-efficient solutions to achieve both financial modernization and social inclusion.

1. Introduction

The transition from traditional financial networks to open, interoperable digital ecosystems is defining the new era of global finance. Real-time payment systems (RTP) are central to this evolution, enabling instant fund transfers, lower costs, and transparent settlements [1].

While developed markets pioneered open banking and fintech ecosystems, emerging economies have overtaken them in real-time transaction volume, user reach, and policy coordination. Systems like India’s UPI and Brazil’s Pix exemplify inclusive innovation, while the UK’s FPS and US FedNow illustrate how institutional fragmentation can slow digital progress [2].

2. Framework of Real-Time Payments and A2A Systems

Real-time payments allow direct, instant, and irrevocable fund transfers between bank accounts. These systems are supported by Application Programming Interfaces (APIs), ISO 20022 messaging standards, and strong data security protocols [3].

Key Features:

• Speed: Settlement within seconds

• Cost Efficiency: Minimal or no transaction fees

• Transparency: Real-time visibility and traceability

• Inclusion: Extends services to previously underserved populations

• Mobile-First Infrastructure: Enables mass adoption and supports digital IDs

3. Comparative Country Analysis

4. Industry Players Driving RTP Innovation

Real-time payments are not only a result of regulatory initiatives but also of private-sector innovation. Across both emerging and developed economies, technology firms, payment networks, and financial institutions are accelerating RTP and A2A integration.

5. Emerging Economies: Innovation Through Inclusion

India – UPI

UPI records over 11 billion monthly transactions and continues to expand cross-border with Singapore’s PayNow [6]. Its zero-fee model, government backing, and open-access APIs have turned it into a public good.

Brazil – Pix

Pix cover 75% of Brazil’s adult population, supporting everything from welfare disbursements to tax payments [7]. With central bank enforcement and free transfers, Pix integrates seamlessly into daily commerce and government operations.

These cases show that innovation can emerge from necessity—public infrastructure and policy alignment can outperform private innovation in achieving inclusion and scale.

Using mobile technology infrastructure, open standards, and astute regulations, these case studies from the emerging economies show how they have leapfrogged ahead of the developed economies in the areas of RTP and A2A finance [10].

6. Developed Economies: Complexity & Fragmentation

United Kingdom – FPS

Despite its early start in 2008, the Faster Payments Service (FPS) faces challenges modernizing its infrastructure. The New Payments Architecture (NPA) aims to improve performance but remains delayed [3].

United States – FedNow

The FedNow system launched in 2023 and coexists with private networks like RTP and Zelle. By 2024, participation reached only 15% of U.S. financial institutions [4].

Unlike emerging economies that mandate adoption, developed economies rely on market incentives, creating inefficiencies, higher costs, and slower inclusion.

7. Comparative Policy and Implementation Challenges

8. Population and Adoption Dynamics

Emerging markets benefit from population-driven network effects and state-backed interoperability.

• India (1.43 B) and Brazil (216 M) reach billions of transactions monthly under centralized frameworks.

• Developed economies—despite higher incomes - struggling with adoption barriers tied to legacy costs and fragmented incentives [8].

Moreover, UPI and Pix provide behavioral data for credit scoring and digital lending—expanding access to finance beyond traditional banking. Developed economies remain limited to payment innovation without equivalent social or economic spillovers.

9. Future Outlook (2025–2027)

The global trend points to cross-border RTP interoperability, with projects like UPI–PayNow and Pix–LATAM corridors already in motion [1].

• 2025: EU completes Instant Payments integration.

• 2026: Regional corridors emerge across Asia and Latin America.

• 2027+: Programmable payments integrate with blockchain and smart contracts for automated settlement.

10. Conclusion

Real-time payments are the new foundation of digital financial infrastructure, bridging the gap between economic growth and social inclusion. Emerging economies have proven that public-led systems can drive private innovation, not stifle it.
India’s UPI and Brazil’s Pix demonstrate that transparent governance, zero-cost design, and interoperable APIs can deliver massive adoption—even among low-income and unbanked populations [6],[7].

In contrast, developed markets face systemic inefficiencies due to fragmented governance, reliance on private networks, and profit-oriented cost structures. Their slower adoption reflects not a lack of technology, but a lack of unified policy and shared vision.

For policymakers, the key lesson is that infrastructure-led inclusion—supported by central banks, digital ID systems, and open access APIs—can generate greater long-term economic value than fragmented market competition.

Looking ahead, the integration of real-time payments, open finance, and programmable money could enable full cross-border interoperability. As regions connect UPI, Pix, and EU Instant Payments into unified corridors, the financial system will move closer to global real-time liquidity, reshaping trade, remittances, and consumer finance at scale.

In short, emerging markets have set the pace, and developed markets must now learn from them—by treating real-time finance not as a profit tool but as a public digital asset essential to the next decade of economic resilience.

References

[1] Bank for International Settlements (BIS). (2024). Interlinking Fast Payment Systems: Building Blocks for Cross-Border Connectivity. https://www.bis.org/cpmi/publ/brief7.pdf
[2] International Monetary Fund (IMF). (2023). Fintech and Cross-Border Payments: Towards Global Interoperability. https://www.imf.org/en/Publications/fintech-note/Issues/2023/01/Fintech-and-Cross-Border-Payments-Towards-Global-Interoperability
[3] European Central Bank (ECB). (2023). Instant Payments in Europe: A Blueprint for Pan-European Reach. https://www.ecb.europa.eu/pub/pdf/other/ecbinstantpaymentsblueprint2023.en.pdf
[4] McKinsey & Company. (2024). Global Payments Report 2024: Real-Time Growth and the Next Wave of A2A Innovation. https://www.mckinsey.com/industries/financial-services/our-insights/global-payments-report-2024
[5] World Bank. (2022). Real-Time Retail Payments Systems: Enabling Financial Inclusion Through Instant Transfers. https://documents.worldbank.org/en/publication/documents-reports/documentdetail/090224b08408f9ad/real-time-retail-payments-systems-enabling-financial-inclusion-through-instant-transfers
[6] EY & Confederation of Indian Industry (CII). (2024). India’s UPI: Behavioral Shift in Rural Finance. https://www.ey.com/en_in/newsroom/2024/12/upi-most-preferred-payment-mode-for-38-percent-indians-in-rural-and-semi-urban-areas
[7] European Payments Council (EPC). (2024). Pix: Brazil’s Leading Instant Payment Scheme. https://www.europeanpaymentscouncil.eu/news-insights/insight/pix-latest-updates-brazils-leading-instant-payment-scheme
[8] Atlantic Council. (2024). Fast Payments in Action: Lessons from Brazil and India. https://www.atlanticcouncil.org/blogs/econographics/fast-payments-in-action-emerging-lessons-from-brazil-and-india
[9] Harvard Business School. (2024). FinTech Lending and Cashless Payments. https://www.hbs.edu/faculty/Pages/item.aspx?num=65409
[10] Keun Lee, Economics of Technological Leapfrogging In: The Challenges of Technology and Economic Catch-up in Emerging Economies. Edited by: Jeong-Dong Lee, Keun Lee, Dirk Meissner, Slavo Radosevic, and Nicholas S. Vonortas, Oxford University Press (2021). https://doi.org/10.1093/oso/9780192896049.003.0005

Back to Homepage

In late 2021, a critical vulnerability in the ubiquitous Log4j library (the Log4Shell incident) exposed thousands of applications to remote code execution attacks. Attackers wasted no time – at one point, over 10 million exploitation attempts per hour were observed. Perhaps more alarming, many organizations did not even realize they had this vulnerable open-source component in their software. This incident underscored a fundamental truth: modern software heavily relies on open-source dependencies, yet visibility into those dependencies’ security status is often lacking. With open-source components present in 97% of codebases on average, no organization is isolated from these supply chain risks.

Hidden Risks in the Open-Source Supply Chain

If a software application depends on an open-source library, that library is a Level 1 dependency. If that library in turn relies on another library, it creates a Level 2 dependency, and so on. In other words, dependencies form a multi-level web of packages – formally, a directed acyclic graph. Figure 1 illustrates a simple open-source dependency graph with direct and transitive dependencies.

Figure 1: An example open-source dependency graph illustrating direct (Level 1) and transitive (Level 2+) dependencies in an application.

To make this more concrete, consider a real-world example: teable – a free, open-source no-code platform with a user-friendly interface (akin to Airtable) backed by a PostgreSQL database. Teable is built on Next.js (a React framework), which itself pulls in many libraries. Figure 2 shows a partial dependency graph for the teable that reveals dozens of libraries and sub-components.

Figure 2: Partial dependency graph for the teable app.

Every single component (PostgreSQL, Next.js, libssl, libxslt, lz4, libxml2) in this graph has had security vulnerabilities reported within the past two years. This scenario is typical rather than exceptional.

According to the 2025 Open Source Security and Risk Analysis (OSSRA) report by Black Duck, each application has ~911 open-source components on average. This scenario of a multi-level web of direct and transitive dependencies is not a hypothetical one but is the norm. From a security perspective, such extensive use of OSS leads to two key issues:

1. Lack of visibility beyond the first dependency layer: Often, application owners do not know the complete list of nested dependencies their software relies on. As a result, they might miss critical security alerts or patches for deeper-level (Level 2, 3, …) libraries. For example, a vulnerability in a transitive dependency may go unnoticed until it’s exploited. Audits show 64% of open-source components in codebases are transitive dependencies, and nearly half of high-risk vulnerabilities are introduced via these deep, indirect components. Without complete visibility, such “hidden” vulnerabilities (like a Log4j buried in a third-party library) can lurk in software for long periods.

2. Delayed and manual security updates: If an application is installed as a pre-built package, its maintenance depends on the package provider’s update cycle. Security patches often get bundled with feature releases and are not delivered immediately. This means critical fixes may be delayed until the subsequent software version roll-out. Ideally, security updates should be decoupled and automated, rather than waiting for major releases. However, in practice, many organizations still update open-source components sporadically. This lag, coupled with the lack of visibility, leaves systems running known-vulnerable versions far too often.

Even organizations that develop critical applications in-house are not exempt. Co-author Ashwini Kumar Rath points out in his article that virtually every codebase includes some OSS. The 2025 OSSRA analysis found 97% of codebases contained open-source software (in specific tech sectors, this was 100%, with even the most conservative industries at 79%). From a security standpoint, 86% of codebases had at least one known OSS vulnerability, with a mean of ~154 vulnerabilities per codebase. These numbers make it clear that the open-source supply chain’s security blind spots are both widespread and severe.

A Two-Pronged Framework

In developing our solution, we were guided by two principles. First, a component in the software supply chain doesn’t know which downstream applications will use it, so it must publicly announce its current security and version information. Second, each application at runtime must verify that all components (at every dependency level) are using their latest, most secure versions, and report any exceptions to the user or an administrator. These principles ensure proactive transparency from component maintainers and continuous validation by applications.

Based on the above, we propose a solution with two complementary components:

Component 1: Auto-Generated Catalog for Visibility

Each open-source application, library, or component should maintain a Software Bill of Materials (SBOM) – essentially a complete inventory of its dependencies. The SBOM would list the component’s name and unique identifier, its version number, and references (e.g., repository or publisher URL). Crucially, this SBOM should be automatically generated at build time (as part of the CI/CD pipeline) to ensure it’s up-to-date for every release.

An SBOM serves as an X-ray of the software, revealing all the ingredients that make up an application. This includes not only direct dependencies but also transitive ones, providing complete visibility into the supply chain. Industry best practices now strongly advocate SBOM usage: for instance, the U.S. Executive Order 14028 (2021) mandates SBOMs for software sold to federal agencies, and NIST’s Secure Software Development Framework (SSDF) requires including SBOM information as part of secure development practices. Several SBOM standards have emerged – SPDX, CycloneDX, and SWID, among others – to define a standard structure and format for this inventory. Organizations can choose a format and use available tools (for example, Syft, CycloneDX plugins, etc.) to generate SBOMs automatically for their projects. The key is that every build produces a machine-readable list of precisely what components (and which versions) went into the software.

Having an SBOM for each component dramatically improves visibility. It allows developers and users alike to quickly answer: “What libraries (and which versions) does this software include?” In the context of our earlier example, if every application had an SBOM, companies would have immediately identified the presence of Log4j and its version in their systems, speeding up remediation. SBOMs also facilitate impact analysis for new vulnerabilities: when a new CVE is announced, organizations can search their SBOMs to see if they are affected. Experts now recommend maintaining an SBOM database and using automated tooling to cross-check for known vulnerabilities.

Figure 3: Example excerpt of a Software Bill of Materials. An SBOM enumerates an application’s components and their metadata (names, versions, licenses, etc.), providing a complete inventory of the software supply chain for that application.

Component 2: An Open API for Security Queries

In addition to the SBOM, each OSS project should provide an open API endpoint for machine-to-machine security queries. This would allow applications and tools to retrieve the latest security status of a component programmatically. For example, a library’s API could return information such as: “What is the latest version available? What vulnerabilities have been fixed in recent versions?” – in a structured format (e.g., JSON). By following a standardized interface (e.g., a RESTful API with an OpenAPI specification), this becomes a universal mechanism for software to ask its dependencies about their health. Notably, the Open Source Security Foundation is working on a “Security Insights” data standard to make project security info machine-readable in just this way.

The goal of this component is to automate updates and alerts. Instead of manually tracking mailing lists or release notes for dozens of libraries, an application can, at runtime, query each dependency’s API to check if a new, more secure version is available. If the API also provides details of security fixes (say, it lists recent CVEs addressed), the application can understand why an update is essential. This is similar in spirit to vulnerability feeds like VEX (Vulnerability Exploitability eXchange), which provide machine-readable advisories about whether a product is affected by a known vulnerability. The difference is that here each component actively publishes its current status for any consumer to retrieve on demand.

With Components 1 and 2 in place, the workflow would be as follows: each time an application starts (or on a scheduled interval), it loads its SBOM. It iteratively queries the security API of every library and component in its dependency graph. It then compares the reported “latest secure version” of each element to the version currently in use. If any component is out-of-date or has a known vulnerability, the application can generate a report or alert to notify the administrator or user. This check can be optimized (for example, performing it once daily in the background, even if the app runs continuously, to avoid excessive network calls). The result is continuous, automated monitoring of the entire open-source supply chain of an application.

Figure 4: Illustration of an automated security query workflow. The application uses its SBOM to identify all dependencies, then queries each dependency’s security API for version and vulnerability info. The responses are aggregated into a security status report, alerting the user if any component is outdated or vulnerable.

Towards a More Secure Supply Chain

By combining SBOM-driven visibility with automated security queries, this framework addresses the twin problems of blind spots and slow updates in the open-source supply chain. The approach is aligned with emerging best practices and standards – from NIST’s SSDF guidelines emphasizing “Know Your Components” and prompt patching, to industry initiatives like OpenSSF’s efforts on Sigstore (for integrity through signed releases) and SLSA (Supply Chain Levels for Software Artifacts) for build provenance. In essence, we’re advocating for a supply chain where every component is transparent about its contents and its security status, and every application actively verifies its dependencies’ integrity in real-time.

Implementing this framework will require collaboration across the software community. Open-source maintainers would need to adopt standard SBOM generation and expose security query APIs (potentially with help from frameworks or hosting services to make this easier). Tooling will be key – for example, integration of these checks into package managers or CI pipelines would automate consumption of the SBOM and API data. Encouragingly, we see moves in this direction: automated dependency scanners and update bots (like Dependabot, etc.) hint at the benefits of machine-readable security info, and initiatives like OpenSSF Scorecards and Security Insights are laying the groundwork for it.

Going forward, adopting “secure by design” supply chain practices – maintaining an SBOM for every software, demanding SBOMs from vendors, and leveraging security APIs or data feeds – will be crucial to defend against the next wave of supply chain attacks. The open-source ecosystem’s strength is shared code; by equally sharing security information and responsibilities, we can ensure that this strength doesn’t become a single point of failure. Together, these measures form a robust framework that significantly raises the bar for open-source security in practice.

Back to Homepage

Robotic Process Automation (RPA) can bring immense benefits to an organization. However, the journey to a successful RPA implementation on an enterprise-scale is built on a foundation of process modeling, model inventorying, and model simulation of the organization’s business processes. This foundation allows management to gain a full understanding of where the inefficiencies and bottlenecks in their business processes lie. It is only when management is armed with this data that they should then decide on how and where to strategically introduce RPA at-scale within the organization. In this article we provide a step-by-step guide on how to lay this foundation.

While organizations can jump straight into implementing RPA, we do not recommend that unless they have first followed the steps discussed below.

Step 1. Identify your Processes

For this discussion, we will define a process as an ordered collection of activities for accomplishing a business function. The functional perspective of an organization views an organization as consisting of functional areas or departments, each with its own charge and hierarchy. Figure 1 shows the following functional areas: Sales & Marketing, Product Development, Accounting & Finance, and Human Resources.

In contrast to and at times as an extension of the functional perspective of an organization, the process perspective views the organization as a collection of processes. What we’ve referred to above as activities, Laudon & Laudon describe as routines in a business firm, these routines help make up business processes. As shown in Figure 2 is a collection of business processes make up the business firm1.

The processes often cut across the functional areas. Actors are people, departments or computer applications that work to complete an activity. Figure 3 shows the requirements analysis as a process with nine activities being completed by five actors2. Four of the actors are functional areas or business units, while the fifth is a computer application, the ERP system.

At the conclusion of this step your organization will have an inventory of all its main processes.

Step 2. Collect Data on your Processes

Processes consume resources – human resources, financial resources, time, and others. You need to gather data on the resource needs of each process. The best way to start this accounting is to focus on each activity in the process. For each activity, get data on the resources that it uses, sometimes estimates may need to be made. Chapter 7 of Oguz’s book on Project Management3 provides some activity duration estimation techniques.

For each process, you will want to note the cycle time, which is “the time taken from starting an assignment until ends, including any lingering times, holding times, or postponements.”4. You will also want to note how long it takes for decisions that alter the flow of the process take to be made and who/what triggers those decisions. Decisions can later be modeled using a decision modeling language, such as Decision Model and Notation (DMN)5.

Step 3. Model your Processes

At the basic level, by modeling your processes we mean documenting the important details of each process. Process models form the basis for much of the analysis and other value-add actions that are performed on businesses processes. As shown in Figure 4 business process models may be used for process documentation, process monitoring, process improvement, and process automation6.

To get the modeling step done as quickly and painlessly as possible you first need to identify for each process the expert(s) in your organization, that is those who have a thorough understanding of the process. These experts will then be the primary sources for the data needed to model each process.

There are many ways to model processes, however here we will only discuss four methods. Each of the methods has pros and cons, we will not go into a detailed comparison of the methods. The modeling processes that we will discuss are:

1. Standard Operating Procedures (SOPs)

   This method involves writing an instruction manual or a SOPs document which lists step-by-step instructions that need to be done to complete the process. An example of SOPs is a flight instructor’s manual which gives a pilot step-by-step instructions on what to do in each flight situation.

2. Flowcharts

   The are diagrams, such as the one as shown in Figure 5, with labeled rectangular shapes with square edges representing activities, diamond shapes representing decisions, labeled rectangular shapes with round edges representing process start and end points, and lines ending with an arrow connecting the shapes representing the flow of control in the process7.

   

3. Petri Nets (PNs)

   A Petri Net (PN) is a graph model for formally or mathematically describing the components of a system, as well as the logical interaction between these components. PNs can be used to describe complex systems, such as distributed systems that may exhibit concurrent or asynchronous behaviors in their operation. While PNs have been used extensively to model distributed systems, van Hee et al.8 and Medina-Garcia et al.9, along with several other researchers have published papers on how PNs can be used to model business processes as well. Figure 6 shows an example of a PN of a supply chain10.

   

   A major benefit of PNs is it is possible to formally verify a PN by proving that model and hence the system it represents behaves as intended, avoiding errors or undesirable effects. However, PNs require extensive training on the part of the modeler in order to be able to accurately model even the simplest business process.

4. Business Process Model & Notation (BPMN)

   BPMN is a standard set of terms and graphical notations for documenting business processes. The standard is published by the Object Management Group.11 Figure 7 shows an example of a BPMN model of an order fulfillment process with annotations highlighted in red.12

   

   Figure 8 shows the BPMN model of a shipment process of a hardware retailer where three different actors are each assigned a swimlane.
   
   BPMN is an expressive modeling language that is designed to be able to model most business processes. We highly recommend using BPMN to model your business processes in preparation for your RPA initiatives instead of any of the other modeling techniques.

   

   Several BPMN tools, such as SAP Signavio Process Manager and Camunda, allow you to add parameters (i.e. metrics from Step 2), such as activity time, activity costs, schedules to the activities in your model and resource costs and availability to your actors.

Once you have modeled your current business processes, that is your as-is processes, we will refer to the models as your as-is process model.

When business processes are properly modeled using BPMN an organization can receive the following benefits.

1. When business processes are modeled, they can more easily be standardized or made uniform across the different branches and units of the organization13 [13]. This helps the organization:

   1. Enforce rules. The models may be used to train employees and help ensure that the same details about processes are passed along and followed. Furthermore, auditors and regulators when needed can review these rules to ensure that they are compliant with the regulations.

   2. Provide consistent results because regardless of the actor playing a role in the process, the activities and decisions are performed in a consistent manner.

   3. Allow for scalability. That is, the organization can replicate the process and implement it in new locations as an organization grows.

   4. Reduce risk. For example, by reducing the potential for errors that may exist when different employees do the same activity differently.

2. BPMN models with simulation parameters, that is one where things like activity with the activity and resource metrics have been input may be simulated. The next step discusses simulations in a bit more detail.

Step 4. Simulate your Business Processes

Business process simulation is a technique that helps business analysts simulate the execution of business processes for studying the resource consumption (e.g., human resources, devices, etc.) throughout a process, identifying bottlenecks and improving the current business by process refinement and resources re-allocation.14 Based on simulations an as-is process model can be modified and tested to produce a to-be process model which can then be used to update the real process and minimize potential disruptions, and other process changes related risks.

Scenario:
In this scenario we will model the customer support operations at a small call center. The objective is to find the appropriate staffing level for a given call volume. We will be modifying the model itself, as well as changing some parameters to reach the objective.

Help desk staff (Level 1 resource) make $8/hour, while support staff (Level 2 resource) make $12/hour.

75% of the calls taken can be resolved over the phone within the first 2 minutes. Once the question is answered, the call exits the system. But the remaining 25% of calls are more difficult and require additional research. The research function takes 20 minutes to complete. Following the research, the call must be returned to the customer. This return call takes 3 minutes.

New calls come into the call center every 5 minutes. Management has determined that the average customers with a difficult issue should not wait more than 60 minutes to receive a call back.

This scenario is adapted from a process model tutorial by ProcessModel, Inc.15

Table 1 and Table 2 summarize the activity and resource input parameters for the process scenario described above.

We model the process using BMPN in SAP Signavio Process Manager as shown in Figure 9, this is the as-is process model.

We run the simulation in SAP Signavio Process Manager using the input parameters in Tables 1 and Table 2. We track five performance metrics: Level 1 resource, Level 2 resource utilization, average cycle time for the difficult calls, bottlenecked activity, and total cost of the process.

Table 3 shows the performance results for the original (as-is) model.

Clearly, we can see that management is right to be concerned about the current setup with this process, as callers who call with a difficult issue are getting a call back in about 11 hours (669.7 minutes) on average. We also have an underutilization of the Level 1 resource and an overutilization of the Level 2 resource.

We are going to create four different to-be models where for each to-be model we make only one change to the as-is model. The four to-be models are:

To-Be Model 1: Change Entity Handling / Modify the flow of control or data – When a Level 2 team member gets a call handed over from the Level 1 team (i.e. a difficult call), they gather the basic information and then hang up. They do not research the issue while the caller is on the line. (Get Research & Free, Return Call later)

To-Be Model 2: Change Responsibilities of Staff – Since the Level 1 resource is underutilized in the as-is model and there is a bottleneck in a activity that’s being completed by the overutilized Level 2 resource, in this model we re-assign the Return Calls activity to the Level 1 resource.

To-Be Model 3: Hire More Staff - Since the Level 2 resource is overutilized in the as-is model and there is a bottleneck in a activity that’s being completed by this resource, in this model we increase the number of Level 2 resources from 1 to 2.

To-Be Model 4: Cross-Train Staff – In this model we cross-train the Level 1 resource to be able to do the Perform Research activity and assign then to assist with the Perform Research activity when there is a low volume in the Take Call activity. Their priority will be to take a call as soon as one arrives, so if there were in the middle of a Perform Research activity, they would pause it and immediately answer the call and then return working on the Perform Research activity when the call volume is low again.

Next, we will run simulations of the four to-be process models and record the five KPIs for each model. Table 4 shows the performance of each to-be model alongside the as-is model.

Analysis of the Multi-Model Simulation Results

We analyze the results to see if any of the to-be models improves upon the as-is model and if it allows us to meet management’s requirements. If more than one to-be model meets the management’s requirement we will then search for the optimal one. From the results in Table 4, we observe that all the to-be models perform better than the as-is model with regards to the average cycle time, but they are all worse with regards to the total cost.

Both To-Be Model 3 and To-Be Model 4, with average cycle times of 38.75 minutes and 53.96 minutes, respectively meet management’s requirement that customers calling in with a difficult issue should have their issue researched and get a call back within 60 minutes. Next, we look at the other KPIs to determine which of these two models is optimal.

Nicole Tiefensee16 and others recommend an optimal resource utilization rate is 70-80%. Based on these recommendations, only To-Be Model 4 is optimal from a resource utilization-perspective. Looking at the total process cost we see that To-Be Model 3 is 96.9% more expensive than the as-is model, while To-Be Model 3 is only 32.7% more expensive than the as-is model. So, from a total cost perspective To-Be Model 3 is the preferred model. Based on the lower total process cost and better optimal resource utilization rate, that falls within the accepted industry guideline, we select To-Be Model 3 as the one that should be selected for implementation to best meet management’s requirement for improving the call center process.

This scenario analysis shows how BPMN business process models can be created and simulated to help understand the current performance of a business process, facilitate the generation of potential updates to the process, simulate and evaluate the performance of the potential updates, and determine if any of these potential updates should be recommended for implementation to improve the process. Translating Apple’s position on failure from Tim Cook, Apple’s CEO who said “We do allow ourselves to fail. We try to fail internally, instead of externally, because we don’t want to involve customers into failure. But we develop things and subsequently decide not to ship”,17 to the impact of BPMN modeling and process simulations in helping organizations mitigate against failed business process improvement initiatives. By using BPMN modeling and process simulations, management can see through this data-driven approach those businesses processes that will fail to scale in the simulations and only introduce into production optimal business processes that they are confident will succeed.

Conclusion

The journey to a successful RPA implementation on an enterprise-level is built on a foundation of modeling, inventorying, and simulation of the organization’s business processes so that management can gain a full understanding of where the inefficiencies and bottlenecks in the organization’s business processes lie. It is only when management has this data that they can decide on how to strategically introduce RPA at-scale within the organization. In this article we provided a step-by-step guide on how to lay this foundation.

Back to Homepage

Digital wallets, also known as e-wallets, have become integral to daily life in the United States, offering convenience and efficiency in financial transactions. These digital tools allow users to store payment information securely on their devices, facilitating swift payments both online and in-store. Services like PayPal, Apple Pay, and Google Pay have gained widespread adoption, simplifying the purchasing process for many users and clients.

Despite their growing popularity, many billers don’t offer digital wallet payments. This has created a gap between consumer preferences and the payment experience their billers offer.

PayNearMe recently conducted a survey to determine how important convenience and hyper-personalization are to consumers during the loan payment process. Research revealed that borrowers are increasingly gravitating toward digital wallets as a loan payment option, while their tolerance for friction is decreasing. 12

Consumer trends: alternative payments methods

An important part of making payment easier for consumers, ultimately driving on-time payments—is offering the payment types they use in other areas of their lives. Today, that includes digital wallets. In the consumer survey, when asked which alternative payment methods are important to them when paying loans online 44% of respondents said Venmo, 55% said PayPal and 43% said Cash App Pay.

These digital wallets have seen remarkable growth in preference since a previous report published by PayNearMe in 2021. Since then, survey respondents noted significant increases in preference for “the big three” as a loan payment option:

Venmo (27% in 2021 - a 63% increase)
PayPal (43% in 2021 – a 26% increase)
Cash App (22% in 2021 – a 95% increase)
Apple pay (15% in 2021)

This increase highlights a strong shift toward these platforms, indicating a competitive landscape where digital wallets are becoming integral to how people manage payments.

What we learned confirms a clear preference: consumers want to pay bills with wallets, and billers are missing an opportunity to attract and retain customers (PayNearMe, 2024).3

Impact of Digital Wallets on the Daily Life of Consumers

The adoption of digital wallets has significantly altered consumer behavior. A 2024 survey revealed that 53% of consumers now use digital wallets more frequently than traditional payment methods, highlighting a shift towards more convenient payment solutions (Cardaq, 2024),(Russ, 2022).

Payments Dive

This trend is particularly evident among younger demographics, with millennials and Gen Z users leading the charge in adopting digital payment methods.

Benefits

• Convenience: Digital wallets streamline transactions, reducing the need to carry physical cards or cash.

• Security: Advanced encryption and authentication methods protect user data, making digital wallets a secure alternative to traditional payment methods.

• Financial Inclusion: E-wallets provide accessible financial services to unbanked populations, offering a gateway to digital payments and financial management.

The PayNearMe (2024) survey shows the generational adoption pattern of digital wallets. It revealed a clear trend of increasing desire for alternative payments across all age groups. Most notably was an increased preference for digital wallets as a payment option for the 45–60-year-old age range from the 2021 report.

The data clearly defies the stereotype that digital wallets are predominantly used by younger consumers. This should serve as an incentive for billers to appeal to all their customers by offering the types they desire.

Survey says that with an income between $150,000 and $174,999 prefer Venmo (71%), PayPal (77%) and Cash App (66%). This diversification suggests that comfort with digital payments transcends economic status, making it a universal trend. Overall, what we’re seeing is that digital wallets have become pervasive across age and income ranges and are an important way to empower customers to self-serve and make on-time payments.

People use digital wallets in a variety of ways in their daily lives, making transactions more convenient, secure, and efficient.

Some Existing Use Cases for Digital Wallets

According to PayNearMe (2024) and Cardaq (2024), here are some of the common ways that digital wallets are being used today.

1. In-Store Purchases

• Contactless Payments: One of the most common uses of digital wallets like Apple Pay, Google Pay, or Samsung Pay is making contactless payments in stores. Instead of swiping a physical credit card, users can simply tap their smartphone or smartwatch on a payment terminal to complete the transaction.

• Speed and Convenience: This eliminates the need to carry multiple cards or cash, speeding up the checkout process and providing a hassle-free shopping experience.

2. Online Shopping

• E-commerce Payments: Digital wallets are widely used for online purchases on websites like Amazon, eBay, or smaller e-commerce sites. By linking a credit or debit card to their wallet, users can easily make payments without re-entering card details every time.

• Secure Checkout: Digital wallets provide an extra layer of security through encryption and tokenization, making online transactions safer.

3. Peer-to-Peer Payments (P2P)

• Sending Money to Friends and Family: People use apps like Venmo, PayPal, or Cash App to quickly transfer money to others. Whether it’s for splitting bills, paying rent, or sending birthday gifts, digital wallets make sending money fast and simple.

• Instant Transfers: These apps often allow users to send money instantly without waiting for business hours or bank processing times.

4. Subscription Payments

• Automated Bill Payments: Many people link their digital wallets to subscription services like Netflix, Spotify, or cloud storage services to make automatic payments each month. This ensures uninterrupted access to services without having to manually pay every month.

5. Transit and Public Transportation

• Commuting with Digital Wallets: In many cities, digital wallets are integrated into transit systems, allowing users to pay for bus or subway rides with their smartphone. For example, users can tap their phones on metro card readers or bus fare machines for seamless travel.

6. Loyalty Programs and Rewards

• Storing Loyalty Cards: Many people store their loyalty or rewards cards digitally in their wallet. This includes cards for grocery stores, coffee shops, and airlines. This makes it easier to track and redeem rewards without carrying physical cards.

• Discounts and Coupons: Digital wallets can also store discount codes and coupons, allowing users to automatically apply them during purchases.

Some Challenges Associated with Today’s Digital Wallets

According to Russ (2022), despite their advantages, digital wallets face several challenges:

1. Security Concerns

While digital wallets offer enhanced security features, they are not immune to threats. Issues such as device theft, phishing attacks, and data breaches pose significant risks. Ensuring robust security measures is crucial to protect user information.

2. Technological Dependence

Reliance on mobile devices for digital payments means that technical issues like software glitches, poor connectivity, or battery depletion can hinder transaction processes.

3. Market Fragmentation

The digital wallet market is fragmented, with various platforms offering different features and levels of acceptance. This fragmentation can lead to compatibility issues and limit the universality of digital wallet usage.

Interoperability based on open standards should help mitigate against items 2 and 3 above. We refer the reader to our The Case for Open Finance - Part 1 article for a discussion on the benefits of open standards and open source.

Conclusion

Digital wallets have transformed the financial landscape in the U.S., offering unparalleled convenience and security in daily transactions. However, addressing security vulnerabilities, technological dependencies, and market fragmentation is essential to fully harness their potential. As technology evolves, digital wallets are likely to become even more embedded in daily life, shaping the future of consumer payments.

Back to Homepage

Back to Homepage

In this article I present four digital wallets that are based on open standards and open source. I discuss the key features of each wallet as well as some of the terminology. While my review of the available digital wallets in this area is not exhaustive, the goal is to highlight some open wallet projects and give the reader an idea of what is happening in this space.

Introduction

The Open Wallet Foundation (OWF) which is part of the Linux Foundation was established in October 2023. It is an initiative aimed at developing open-source software and standards for digital wallets. While the foundation is still relatively new, it is working to create interoperable, secure, and privacy-preserving digital wallet solutions. Specific wallets based directly on the OWF toolkit are still in development or early stages of user testing. In this article we present three examples based on OWF, and another that is not however it is open sourced:

1. Trinsic

Trinsic is a prominent platform in the decentralized identity (DID) space, focusing on enabling developers and organizations to build self-sovereign identity (SSI) solutions, including digital wallets. Trinsic is designed to support open standards like W3C Verifiable Credentials (VCs) and Decentralized Identifiers (DIDs), which are foundational to interoperable and secure digital identity ecosystems.

Key Features of Trinsic:

• Support for Open Standards

  Trinsic is built to comply with W3C Verifiable Credentials and DID standards, ensuring interoperability with other systems and wallets that adhere to these standards.

  It also supports DID methods like did: key, did: web, and others, allowing flexibility in how identities are created and managed.

• Wallet SDKs and APIs

  Trinsic provides Software Development Kits (SDKs) and APIs for developers to integrate decentralized identity capabilities into their applications.

  Supported platforms include JavaScript/TypeScript, Python, Go, Java, and more.

• Credential Issuance and Verification

• Trinsic enables organizations to issue verifiable credentials (e.g., digital driver’s licenses, diplomas, or membership cards) and verify them securely.

  It supports zero-knowledge proofs (ZKPs), allowing users to share only the necessary information without revealing sensitive data.

i. Sign Up: Create an account on the Trinsic website.

ii. Explore Documentation: Check out their comprehensive developer documentation.

2. Sovrin Wallet

Sovrin Wallet is a key component of the Sovrin Network, which is one of the most well-known decentralized identity (DID) networks.

The Sovrin Network is built on the principles of self-sovereign identity (SSI), empowering individuals and organizations to control their digital identities without relying on centralized authorities. The Sovrin Wallet is designed to support open standards like W3C Verifiable Credentials (VCs) and Decentralized Identifiers (DIDs), making it a robust tool for managing digital identities and credentials.

Key Features of the Sovrin Wallet:

• Support for Open Standards

  The Sovrin Wallet adheres to W3C Verifiable Credentials and DID standards, ensuring compatibility with other SSI ecosystems and wallets.

  It uses the Sovrin DID method (did:sov), which is specifically designed for the Sovrin Network.

• Self-Sovereign Identity (SSI)

  Users have full control over their identities and credentials, stored securely in their wallets.

  Credentials can be issued, stored, and verified without relying on centralized intermediaries.

• Credential Management

  The wallet allows users to store and manage verifiable credentials (e.g., digital IDs, diplomas, certifications).

  Users can selectively disclose information using zero-knowledge proofs (ZKPs), enhancing privacy.

Download the Wallet: The Sovrin Wallet is available as a mobile app for iOS and Android.

3. Microsoft Entra Verified ID

Microsoft Entra Verified ID (formerly known as Azure AD Verifiable Credentials) is Microsoft's solution for decentralized identity and verifiable credentials. As a founding member of the OpenWallet Foundation, Microsoft has been actively contributing to the development of open standards for digital identity and wallets. Their solution is designed to be interoperable, secure, and privacy-preserving, aligning with the principles of self-sovereign identity (SSI).

Key Features of Microsoft Entra Verified ID:

• Support for Open Standards

  Microsoft Entra Verified ID is built on W3C Verifiable Credentials and Decentralized Identifiers (DIDs), ensuring compatibility with other systems that adhere to these standards.

  It uses the ION network, a Bitcoin-based decentralized identity network, for anchoring DIDs.

• Interoperability

  Designed to work seamlessly with other decentralized identity ecosystems, enabling cross-platform credential sharing and verification.

  Supports integration with third-party wallets and identity systems.

Official Documentation: Microsoft Entra Verified ID Documentation.

4. Connect.Me

This wallet was developed by Evernym and they describe it as “the world's most advanced general purpose digital wallet. Its purpose is to empower individuals to gather, hold and share digital credentials in the most secure and privacy preserving way possible. It uses Hyperledger Indy to talk to distributed ledgers and Hyperledger Ursa for performing advanced cryptographic operations such as signing, proof generation and holder binding.”

Key Features of Connect.Me:

• Form private, secure connections with other entities in the Sovrin ecosystem

• Gather and store digital credentials

• Present digital proofs of part or all of your credentials, privately and securely

• Answer secure messages from any connection you have

Get the source code from https://github.com/evernym/ConnectMe.

Conclusion

In this article I introduced four open wallet projects. This is an area where there is a lot of development that happening. The open source space is very dynamic with new projects starting all the time, while others are growing, stagnating, or dying depending on the level of community support. I encourage readers to let me know of any additional projects that are based on open standards and open source.

Back to Homepage

Open banking represents a significant advancement in financial technology, allowing third-party developers—such as fintech companies and app creators—to securely access consumer banking data, transaction histories, and other financial information via Application Programming Interfaces (APIs). This innovative approach transforms the financial landscape by enabling a seamless and secure exchange of data among various stakeholders, including traditional banks, fintech firms, and authorized third parties.

The primary objectives of open banking include fostering innovation within the financial services sector, improving customer experience by offering personalized and tailored financial solutions, and enhancing financial inclusion by providing underserved populations with better access to financial products and services. By leveraging open banking, businesses can create new applications and services that cater to the diverse needs of consumers, ultimately contributing to a more competitive and efficient financial ecosystem.

Introduction

The concept of open banking is fundamentally built upon three key pillars: transparency, interoperability, and security as shown in Figure 1. It fosters an environment where banks and financial institutions work closely with third-party providers (TPPs) to design and implement customized financial products and services that cater to diverse consumer needs. These offerings can include a wide array of tools, such as budget management applications that help users track and optimize their spending, as well as streamlined lending processes that simplify access to credit for consumers and businesses alike.

To ensure these collaborations are safe and beneficial to consumers, open banking operates under the oversight of various regulatory frameworks established by government bodies. For instance, the European Union has introduced the Payment Services Directive 2 (PSD2), which mandates that banks must provide secure access to their customer data to authorized TPPs, given the customer’s consent. Similarly, the UK has implemented its Open Banking Standard, which aims to enhance competition and innovation in the financial sector by allowing consumers greater control over their banking data and the services they choose to use. These regulations not only promote a more competitive marketplace but also prioritize consumer protection, ensuring that any sharing of financial information is done securely and transparently1.

Next, we present the key features of open banking and information about some of the leading companies in this space. We then make the case as to why financial institutions should adopt open banking.

Key Features of Open Banking

• Data Sharing: Customers consent to share their financial data with Third Party Providers (TPPs).

• API Integration: APIs serve as the technical foundation for secure data exchange.

• Customer-Centric Services: Innovations encompass personalized financial advice, convenient payment solutions, and enhanced access to credit.

• Regulation-Driven Security: Open banking frameworks emphasize strong security measures, ensuring the protection of customer data2.

Companies Leading in Open Banking

A wide array of companies, from traditional banks with long histories to dynamic fintech startups pushing the boundaries of financial technology, are pushing towards the concept of open banking. This transformative approach to banking has attracted a diverse group of key players, each making significant strides in their journeys as shown in Figure 2.

Below, we explore some of these influential entities and highlight their advancements within the open banking landscape.

Plaid

• API Specialization: Plaid specializes in providing application programming interfaces (APIs) that facilitate smooth and efficient connectivity to a wide range of financial data. These APIs enable developers to integrate sophisticated financial services into their applications, enhancing user experience and functionality.

• Progress: Plaid has formed partnerships with thousands of financial institutions across the globe, which has allowed it to become a key player in the financial technology landscape. Its APIs support various applications and platforms, including personal budgeting tools, investment management software, and other financial services, making them indispensable for users seeking to manage their finances effectively.

• Milestones: A notable achievement for the company was the attempted acquisition by Visa for an impressive $5.3 billion. This significant offer not only reflects the company's pivotal role in the financial technology sector but also highlights its potential for continued growth and innovation within the industry3.

Yodlee

• Data Aggregation Leader: Yodlee specializes in offering comprehensive financial data aggregation and insightful analysis services to clients across different sectors.

• Progress: Yodlee plays a significant role in the implementation and integration of open banking initiatives across several key regions, including North America and Europe. This involves collaborating with financial institutions to ensure compliance with regulatory requirements, enhancing customer access to banking services, and facilitating smoother financial transactions through innovative technology solutions4.

TrueLayer

• Secure API Services: providing robust secure API services that facilitate safe and reliable access to user accounts and payment systems. By implementing advanced security measures, TrueLayer ensures that their users can manage their financial transactions with confidence and peace of mind.

• Progress: TrueLayer is actively engaged in the development of real-time payment solutions and comprehensive financial dashboards, focusing particularly strong in the European market, where they aim to enhance the efficiency and transparency of financial transactions, making it easier for users to monitor and manage their finances in real-time5.

Tink

• European Market Leader: This company provides robust API solutions to over 3,400 banks throughout Europe, facilitating seamless integration and communication between financial institutions and their technology partners.

• Progress: The organization is dedicated to enhancing the banking experience by focusing on personalized services and improving the efficiency of API connectivity. This commitment to innovation allows banks to deliver tailored financial solutions to their customers, ensuring a more engaging and user-friendly experience6.

Open Banking Limited (OBL)

• Standards Implementation: Focuses on creating and implementing secure API specifications for the financial sector within the UK. This process involves thorough research and adherence to regulatory requirements to ensure that APIs meet the highest security standards.

• Progress: Works diligently to establish comprehensive frameworks that facilitate effective collaboration between banks and Third-Party Providers (TPPs). By fostering this collaboration, customer trust is significantly enhanced, as consumers can be assured that their data is being handled securely and transparently, leading to more seamless and innovative financial services7.

Revolut and Monzo (Neobanks)

• Neobanks are revolutionizing the financial landscape by utilizing open banking to significantly enhance user experiences. This approach allows for greater integration and collaboration with third-party financial services, leading to innovative solutions tailored to individual needs.

• Progress: Neobanks are focused on developing and delivering advanced features that provide added value to their customers. This includes user-friendly consolidated dashboards that offer a comprehensive view of all financial accounts in one place, sophisticated budget management tools that help users track and control their spending effectively, and seamless cross-border payment solutions that facilitate easy and cost-effective international transactions. By prioritizing these features, neobanks are creating a more efficient and user-centric banking environment8.

Why Companies Should Shift to Open Banking

1. Enhanced Customer Experience

   Open banking transforms the way companies interact with their customers by enabling them to offer tailored financial services that reflect individual needs and preferences. By leveraging data analytics to examine a customer’s transaction history and spending behavior, businesses can provide personalized recommendations that enhance customer satisfaction. For instance, financial institutions can create custom budgeting tools or suggest relevant financial products that align with a customer’s lifestyle and goals. This level of personalization not only fosters greater customer loyalty but also creates more engaging marketing campaigns targeted specifically at different customer segments.

2. Fostering Innovation

   Seamless API collaboration allows businesses to create unique financial solutions, such as automated savings and credit models.

3. Increased Financial Inclusion

   The open banking model, driven by the use of Application Programming Interfaces (APIs), promotes collaboration between startups and established financial institutions, paving the way for groundbreaking financial solutions. This environment of innovation has led to the development of a variety of useful tools, such as automated savings platforms that help users save money effortlessly by analyzing spending patterns, and investment advisory applications that provide tailored investment strategies based on an individual’s financial situation. Additionally, alternative credit scoring models are emerging, which rely on a broader set of data points to assess creditworthiness, ultimately leading to more fair lending practices9.
   Open banking plays a crucial role in increasing financial inclusion for underserved populations who may be overlooked by traditional banking systems. By using alternative credit scoring mechanisms that take into account non-traditional financial behaviors—such as regular rental payments, utility bill payments, and other consistent financial activities—financial institutions can extend loan access to individuals lacking conventional credit histories. This means that more people can qualify for essential financial services, improving their overall economic stability and providing opportunities for personal and professional growth.

4. Cost Efficiency

   The automation of various financial processes through open banking leads to significant cost savings for both financial institutions and their customers. By minimizing the need for manual intervention in critical operations like loan underwriting, account opening, and customer onboarding, financial institutions can streamline their workflows, resulting in faster service delivery and reduced operational costs. These savings can then be passed on to customers in various forms, such as lower fees and competitive interest rates, thus enhancing overall customer satisfaction10.

5. Competitive Edge

   In the fast-paced financial landscape, adopting open banking practices allows businesses to stay ahead of their competitors. By embracing innovative technologies and new business models, companies can offer unique and cutting-edge products and services that resonate with consumers. For instance, the ability to integrate financial services into daily life through mobile apps or platforms that aggregate various financial accounts can provide a seamless customer experience. This differentiation is vital in attracting tech-savvy customers who seek convenience and modern solutions that traditional banks may struggle to provide.

6. Regulatory Compliance

   Complying with open banking regulations, such as the Revised Payment Services Directive (PSD2), builds trust and transparency between financial institutions and their customers. These regulations are designed to protect consumer interests by ensuring that financial data is shared securely and used responsibly. Businesses that align themselves with these compliance standards not only enhance their credibility in the eyes of consumers but also position themselves as leaders in ethical financial practices. Demonstrating adherence to regulatory frameworks can foster long-lasting relationships with customers who value transparency and accountability.

7. New Revenue Streams

   Open banking presents an opportunity for companies to explore new revenue streams by monetizing data, provided they obtain customer consent. By analyzing valuable insights derived from consumer behavior and preferences, businesses can expand their offerings into areas such as premium APIs or subscription-based financial tools. For example, financial institutions can create exclusive products tailored to niche markets or launch value-added services that enhance customer engagement and loyalty. Additionally, collaborating with third-party developers to create new applications can result in diversified income sources, further enhancing the financial institution’s growth potential11.

Conclusion

Open banking is significantly transforming the financial industry by promoting the sharing of financial data among authorized third parties, which fosters innovation and enhances financial inclusion for consumers and businesses alike. This shift is driven by the rise of industry leaders such as Plaid, TrueLayer, and Yodlee, who are effectively demonstrating the potential of application programming interfaces (APIs) to create seamless and efficient financial services.

By adopting open banking practices early, companies can gain a substantial competitive advantage. They can offer tailored financial products and services, improve customer experiences, and access new revenue streams. For example, open banking allows for personalized financial advice, easier loan applications, and streamlined payment processes, ultimately benefiting consumers in a connected financial ecosystem.

However, as open banking continues to evolve, it is crucial for companies to prioritize robust security protocols and comply with regulatory requirements. Ensuring the protection of customer data from breaches and misuse is essential not only for maintaining consumer trust but also for meeting legal obligations.

As the global adoption of open banking accelerates, its transformative power will undoubtedly reshape the landscape of financial services, paving the way for greater innovation, inclusivity, and efficiency in how individuals and businesses manage their finances. The future of finance is being redefined, and those who embrace this change will be well-positioned for success.

This article introduces digital wallets and describes the three main use cases for digital wallet today, which are around payments, identity, and access. Specific examples around each of these uses cases are outlined. Digital wallets are closely linked to mobile phones and as such these wallets continue to gain popularity across the world as a means of payment. The article briefly describes how digital wallets work. Next, the challenges of the current digital wallet ecosystem are discussed, in particular it is shown how the current litany of isolated digital wallets that are not standards-based leads to data silos which impact the users’ experience and also presents them with security vulnerabilities. The article discusses why open wallets are the way to address the challenges facing the digital wallets ecosystem today. Finally, the Open Wallets Foundation is introduced as an organization seeking to build a digital wallets ecosystem that is based on open standards and open-source.

Introduction

The use of digital wallets continues to grow globally in conjunction with the increased use of mobile phones and other smart devices. Besides their use as a tool for payments, digital wallets have the potential to lead to the building of a financial environment that is decentralized, disintermediated, democratized, disaggregated, debiased and where individuals have more financial autonomy. This is the case especially when the concept of open digital wallets is combined with others such as the blockchain and open banking which are the focus of this newsletter.

In this article we introduce digital wallets and describe the three main use cases for digital wallet today, which are around payments, identity, and access. We outline specific examples around each of these uses cases. Digital wallets are closely linked to mobile phones and as such these wallets continue to gain popularity across the world as a means of payment. We also briefly describe how digital wallets work. The challenges of the current digital wallet ecosystem are discussed, in particular we show how the current litany of isolated digital wallets that are not standards-based leads to data silos that impact the users’ experience and also presents them with security vulnerabilities. We discuss why open wallets are the way to addressing the challenges facing the digital wallets ecosystem today. Finally, we introduce the Open Wallets Foundation, an organization seeking to build a digital wallets ecosystem based on open standards and open-source.

What is a Digital Wallet?

Much like its physical counterpart, a digital wallet is a secure place on a smartphone or a smart device where important digital items (assets) such as financial account information or digital identity information are encrypted and stored. Today digital wallets are mainly used for three functions: payments, digital identity, and digital access. Digital wallets can be used to facilitate payment for products online or in physical stores at a point-of-sales (POS) terminal. Digital wallets can also be used to prove one’s identity, for example when used in an e-passport, and to enable access to services when for example they store things like train or concert tickets.

Google Pay, Apple Pay and Samsung Pay are some of the more well-known digital wallets that can be used both online and offline. While PayPal, Venmo, CashApp, and Zelle are other well-known digital wallets in the U.S. with more usage in online or mobile transactions. Around the world there are several digital wallets, such as M-Pesa, AliPay, WeChat, Tingo Money, GCash, and Orange Money which are used primarily for mobile payments1.

One area where digital wallets dominate is in payments. According to 2023 global payments report by Worldpay from FIS2, digital wallets will continue to be the leading payment method for both e-commerce and POS retail, as can be seen from Figure 1.

How Digital Wallets Work

Next, we present a brief overview of how digital wallets work. We will use payments as a use case for this overview.

The digital wallet is a secure container in the mobile device where the digital assets are stored and can be accessed from. An agent is a software module that can put digital assets into the container or access the digital assets in the container. The mobile user accesses their digital wallet through the agent as shown in Figure 2.

Figure 3 from Anwar et al.3 shows a mobile device with a digital wallet using Near-Field Communication-enabled POS to facilitate a purchase via a credit card payment network.

A more detailed presentation of how digital wallets work will be provided in a future article.

Uses of Digital Wallets

Besides payments, digital wallets may be used to store4:

• Credit or debit cards

• Passwords or keys

• Cryptocurrencies

• Boarding passes

• Hotel reservations

• Concert tickets

• Gift cards

• Coupons

• Loyalty-rewards cards

Challenges with Today’s Digital Wallet Ecosystem

Many of today’s digital wallets are designed, developed, and supported using a black box model that is controlled by a single organization. In many cases it is not known how the user data is stored and secured in the wallet, that is these organizations have adopted the security through obscurity paradigm5. In the black box model, once the user’s data enters the digital wallet often it cannot be shared with other wallets as there are at present no standards for wallet interoperability. Users cannot easily transfer their data to a competing digital wallet or have one wallet work with another in a federated fashion. The user wanting to use another competing digital wallet has to sign-up for that wallet and potentially recreate the stored data that is the present situation creates vendor lock-in with the data silos as a by-product. These data silos increase data redundancy and potentially increase the security risks for users as they may have their data in multiple locations (wallets).

Graham6 lists the following as additional limitations of the current digital wallet ecosystem:

• Questionable security

• Intrusive business models

• Limited capabilities

Open Wallets As the Way Forward

Digital wallets based on open standards and open-source promise to address the challenges mentioned above. Leading the charge in this effort is the Open Wallet Foundation (OWF) which is one of the Linux Foundation projects. OWF “brings developers, standard development organizations and academia together to facilitate global interoperability of verifiable credentials, by establishing best practices and through collaborative development of digital wallet technology to enable standards-based OSS (open source software) components that issuers, and wallet providers can rely on.”7

We will discuss more about the OWF projects in future are articles, but in the meantime we want to bring to the attention of our readers the Open Digital Wallet – Infographic from the OWF.

Conclusion

In this article we introduced digital wallets and described the three main use cases for digital wallet today, which are around payments, identity, and access. We outlined specific examples around each of these uses cases. Digital wallets are closely linked to mobile phones and as such these wallets continue to gain popularity across the world as a means of payment. We provided a brief description of how digital wallets work. The challenges of the current digital wallet ecosystem were discussed, in particular we showed how the current litany of isolated digital wallets that are not standards-based leads to data silos that impact the users’ experience and also presents them with security vulnerabilities. We discussed why open wallets are the way to address the challenges facing the digital wallets ecosystem today. We concluded by introducing the Open Wallets Foundation, an organization that is seeking to build a digital wallets ecosystem based on open standards and open-source.

This article introduces blockchain technology as an innovative concept that provides a secure and tamper-proof way to create decentralized systems that eliminate the need for intermediaries. Since the first real-world implementation of the concept in 2009, blockchains have now been widely adopted in the financial services industry. Through a series of question-and-answer discussions, this article looks at how a blockchain works and where it can best be used. Finally, we highlight the strong connections between blockchain and open-source and open standards in finance.

Introduction

Blockchain is a powerful technology that improves security, transparency, and trust across various industries. It enables decentralized systems, prevents data tampering, and eliminates the need for intermediaries. From cryptocurrencies and smart contracts to supply chain and healthcare, blockchain offers innovative solutions to modern challenges. In this article we introduce blockchain technology by answering the following questions: What is a blockchain? How does the blockchain work? Why use a blockchain? How do I decide when to use a blockchain? Next, we examine leading open-source blockchain platforms. Finally, we look at a few blockchain platforms designed specifically for the financial services industry.

What Is A Blockchain?

A blockchain is a digital system for recording and storing information in a way that is secure, transparent, and cannot be modified. Imagine a chain of blocks, where each block contains a group of records or transactions, and every block is linked to the one before it using complex mathematical techniques called cryptography. Unlike traditional systems where one central authority (like a bank) controls the data, blockchain operates on a decentralized network of computers. The Keywords section at the end of this article provides definitions of the italicized terms used in this article. This means everyone on the network has a copy of the entire record, and they work together to verify and agree on new entries through a process called consensus. Once information is added to a block and linked to the chain, it cannot be changed or deleted, that is the information is immutable; this making blockchain highly secure and trustworthy. It is widely used in cryptocurrencies like Bitcoin, but its applications extend to many areas, such as managing digital identities, tracking supply chains, securing medical records, and even creating automated (smart) contracts. By eliminating the need for intermediaries, blockchain ensures transparency, enhances trust, and reduces the risk of fraud or manipulation.

How Does The Blockchain Work?

In this section we present a simplified description of how a blockchain works from a data storage perspective. Figure 1 shows a simplified blockchain data structure that has been adapted from Drescher1. The simplified blockchain-data-structure consists of two blocks labeled BLOCK 1 and BLOCK 2. Both blocks contain block headers labeled Block Header 1 and Block Header 2, respectively. BLOCK 1 is the very first block in this data structure (i.e. blockchain), hence, it does not have a preceding block, and, consequently, Block Header 1 does not contain any reference to a preceding block header. That is BLOCK 1 does now have an orange circle with a secure address or reference of the previous block. When talking to technical folks each of these secure addresses will be referred to as a hash or digest. Since BLOCK 2 has a predecessor, Block Header 2 maintains a hash to its preceding block header labeled as B1. R1 and R2 are hashes of the data for Transaction 1 and Transaction 2, respectively. R1 and R2 are hashed to create R12 the hash of all the transaction in the block.

Two important things to note here, firstly, the process that takes data and generates a secure address or hash of that data operates in one direction only, as shown in Figure 22. What this means is that, if I have the data I can use the SHA-1 hash function to recreate the hash, but if I have the hash, I cannot recreate the data.

Secondly, should the data in Transaction 1 or Transaction 2 be modified in any way then R1 or R2 will change and as a result the hash of Block Header 1 will no longer be B1, so BLOCK 2 will no longer be chained to BLOCK 1.

Why Use A Blockchain?

Blockchain is highlighted as a transformative technology due to its ability to address critical challenges related to security, transparency, and efficiency. Blockchain provides a decentralized system where data is stored securely and cannot be altered, eliminating the need for intermediaries and ensuring trust among participants. In the metaverse, blockchain ensures data privacy, asset management, and platform interoperability, fostering seamless digital ecosystems. For financial systems, it offers secure and transparent solutions for cross-border payments, cryptocurrencies, and smart contracts, reducing reliance on centralized authorities and enhancing efficiency. Blockchain is also leveraged in healthcare and supply chain management industries to ensure tamper-proof records, improve transparency, and streamline processes. Additionally, its flexibility in permissioned and permissionless models allows tailored applications for regulated industries like finance and healthcare. Across all use cases, blockchain's core features—decentralization, immutability, and transparency—make it a powerful tool for fostering trust, innovation, and collaboration in multi-stakeholder environments.

Where To Use A Blockchain?

Blockchain can be used in various ways depending on the industry and application. Here's how it is typically utilized:

• Cryptocurrencies: Blockchain powers digital currencies like Bitcoin and Ethereum. Users can securely send, receive, and store digital money without relying on banks or intermediaries. It also ensures transparency and prevents fraud, such as attempts to double-spend when using a digital currency.

• Smart Contracts: Blockchain allows for self-executing contracts where terms are written into code. These smart contracts automatically execute when predefined conditions are met, reducing the need for middlemen in agreements like loans, insurance claims, or real estate transactions.

• Supply Chain Management: Companies use blockchain to track goods throughout their supply chain. It ensures transparency, authenticity, and traceability, helping reduce fraud and improve efficiency in industries like retail, agriculture, and manufacturing.

• Healthcare: Blockchain secures patient records, allowing only authorized parties to access and share data. It improves privacy, reduces errors, and ensures data integrity for medical histories, prescriptions, and diagnostic information.

• Identity Management: Blockchain helps individuals control their digital identities securely. It prevents identity theft and simplifies verification processes for accessing services like banking, education, or government programs.

• Voting Systems: Blockchain can create secure, transparent, and tamper-proof voting systems. Each vote is recorded on the blockchain, ensuring accuracy and eliminating fraud.

• Asset Ownership: Blockchain records ownership of digital and physical assets, such as real estate, intellectual property, or art. It creates a transparent and unalterable history of ownership and transfers.

• Decentralized Finance (DeFi): Blockchain enables financial services like lending, borrowing, and investing without traditional intermediaries, providing faster, more accessible, and transparent financial solutions.

• Energy Management: Blockchain facilitates peer-to-peer energy trading, where individuals can sell excess energy from renewable sources like solar panels to others in their community.

• Gaming and NFTs: Blockchain is used in gaming for virtual goods ownership and non-fungible tokens (NFTs), which represent unique digital assets like art, collectibles, or in-game items.

How Do I Decide When To Use A Blockchain?

The blockchain is not the ideal solution to every problem in finance. Below we present a decision model adapted from Yiu3 that may be used to decide if it is appropriate for you to use the blockchain in your solution.

Leading Open Source Blockchain Platforms

Many well-known blockchain platforms are supported by an open-source community. Below is a list and descriptions of six leading open source blockchain platforms from Ashutosh Dubey4.

1. Ethereum: Ethereum is a decentralized, open-source blockchain platform that supports smart contracts and the development of decentralized applications (dApps). It uses its native cryptocurrency called Ether (ETH) and is known for its programmable functionality, which allows developers to build complex applications on top of the blockchain.

2. Hyperledger Fabric: Hyperledger Fabric is an open-source permissioned blockchain platform developed by the Linux Foundation. It provides a modular architecture that enables enterprises to build private, scalable, and secure blockchain networks. Fabric supports smart contracts written in various programming languages and offers features like channel-based privacy, flexible consensus mechanisms, and membership services.

3. Corda: Corda is an open-source blockchain platform designed for enterprise use cases. It focuses on privacy and security by using a permissioned network architecture. Corda enables businesses to transact directly, securely, and privately using smart contracts. It also provides a unique “notary” service for validating transactions without exposing sensitive data.

4. Stellar: Stellar is an open-source blockchain platform designed for cross-border transactions and digital asset issuance. It offers fast, low-cost transactions and supports the creation of tokens and assets on the network. Stellar uses a consensus protocol called the Stellar Consensus Protocol (SCP) and has a built-in decentralized exchange for asset trading.

5. IOTA: IOTA is an open-source blockchain platform specifically designed for the Internet of Things (IoT). It utilizes a directed acyclic graph (DAG) called the Tangle instead of a traditional blockchain. IOTA aims to provide a scalable, fee-less, and secure infrastructure for machine-to-machine transactions and data transfer in IoT ecosystems.

6. Tezos: Tezos is an open-source blockchain platform that features a self-amending governance mechanism. It allows stakeholders to vote on proposed protocol upgrades without the need for hard forks. Tezos supports smart contracts and offers formal verification, a technique for mathematically proving the correctness of the code.

Some Applications Of Blockchains In Finance

In this section we present a few blockchain platforms designed specifically for the financial services industry.

Consensys Quorum: Quorum is an enterprise-variant of the Ethereum blockchain that was developed by JP Morgan Chase. It was acquired by Consensys in August 2020. Quorum is an open-source project that incorporates features like private transactions, network permissions, and enhanced data privacy. This platform is widely used in industries such as finance and supply chain management, where privacy and confidentiality are critical.

R3 Corda: The R3 Corda blockchain platform was designed for the financial services industry, particularly around trade finance. With R3 Corda parties can securely share trade documents like letters of credit and invoices.

Ripple: Ripple is a blockchain-based digital payment network and protocol that uses the XRP Ledger (XRPL), an open-source, permissionless and decentralized blockchain technology and XRP, XRP is a digital asset that’s native to the XRPL. Ripple generates revenue by providing cross-border payment and crypto liquidity services to businesses.

Conclusion

Blockchain is a powerful technology that improves security, transparency, and trust across various industries. It enables decentralized systems, prevents data tampering, and eliminates the need for intermediaries. From cryptocurrencies and smart contracts to supply chain and healthcare, blockchain offers innovative solutions to modern challenges. We looked at how a blockchain works and where it can best be used. Finally, we highlighted the strong connections between blockchain and open-source and open standards in finance.

Keywords

Here is list of describing nine keywords used in this article.

Cryptography: Using advanced math to protect information, ensuring only authorized people can access it.

Decentralized Network: A system where no single person or organization controls the data; instead, all users work together to maintain it.

Consensus: An agreement among all participants in the network to verify and validate data before adding it to the blockchain.

Immutable: Once data is added to the blockchain, it cannot be changed or deleted, ensuring trust and security.

Transactions: The actions or exchanges recorded in the blockchain, such as payments, contracts, or data transfers.

Transparency: Everyone in the network can see and verify the stored information, making it trustworthy.

Cryptocurrencies: Digital money, like Bitcoin, that uses blockchain to operate securely without a bank or intermediary.

Permissionless Blockchain: Is a public blockchain platform that is fully decentralized and open to all. Anyone can validate data and participate in consensus on the platform.

Permissioned Blockchain: Is a blockchain platform where every user must have a verified identity, that is it is not a public platform.

Robotic Process Automation (RPA) has emerged as a key technology to streamline and automate these business processes. It has also emerged as a technology that can help organizations adopt digital twins and AI agents. This article explores the application of RPA in banking & finance, highlighting its benefits and top software solutions. A comparative analysis of leading commercial RPA tools, including Automation Anywhere, Blue Prism, and UiPath, is provided, discussing their pros and cons.

Introduction

Open finance promises to revolutionize the financial services industry by enabling secure and standardized data exchange between financial institutions, fintech companies, and third-party providers. However, this increased data exchange has also led to a surge in manual processing tasks, such as data entry, reconciliation, and compliance reporting. Robotic Process Automation (RPA)1 offers an solution to automate these tasks, increasing efficiency, reducing errors, and improving customer experience.

Revolutionizing Banking & Finance with RPA

RPA provides an opportunity for the financial services industry to automate manual processing tasks2, such as data entry, reconciliation, and compliance reporting.

RPA involves the use of software robots to mimic human actions, interacting with systems and applications to perform repetitive and rule-based tasks. In the context of open finance and open banking, RPA can help financial institutions to:

• Improve efficiency and reduce processing times

• Enhance accuracy and reduce errors

• Increase compliance and regulatory adherence

• Provide better customer experiences

Key Applications of RPA in Banking & Finance

1. Data Aggregation and Reconciliation: RPA can be used to aggregate data from multiple sources, reconcile discrepancies, and update systems accordingly.

2. Compliance Reporting: RPA can help financial institutions to generate compliance reports, such as anti-money laundering (AML) and know-your-customer (KYC) reports.

3. Customer Onboarding: RPA can automate the customer onboarding process, verifying customer information, and updating systems accordingly.

4. Payment Processing: RPA can be used to automate payment processing, reconciling payments, and updating systems accordingly.

Benefits of RPA in Banking & Finance

1. Improved Efficiency: RPA can automate repetitive and rule-based tasks, freeing up staff to focus on higher-value tasks.

2. Enhanced Accuracy: RPA can reduce errors and improve accuracy, ensuring that data is processed correctly and consistently.

3. Increased Compliance: RPA can help financial institutions to comply with regulatory requirements, reducing the risk of non-compliance.

4. Better Customer Experiences: RPA can help financial institutions to provide faster and more accurate services, improving customer satisfaction and loyalty.

Top RPA Software Solutions for Banking & Finance

Here are three of the leading commercial RPA software solutions:

1. Automation Anywhere3: Automation Anywhere is a leading RPA software solution that provides a scalable and flexible architecture for automating business processes.

2. Blue Prism4: Blue Prism is a robust RPA software solution that provides a secure and compliant platform for automating business processes.

3. UiPath5: UiPath is a popular RPA software solution that provides an easy-to-use and intuitive platform for automating business processes.

Comparison of Top RPA Software Solutions

Next we present a comparative analysis of three leading commercial RPA tools, highlighting the strengths and weaknesses of each tool.

Automation Anywhere

Pros:
- Easy to use and implement
- Scalable and flexible architecture
- Strong analytics and reporting capabilities

Cons:
- Limited AI capabilities compared to other tools
- Can be expensive for large-scale deployments

Blue Prism

Pros:
- Robust security and compliance features
- Strong integration with enterprise systems
- Scalable and reliable architecture

Cons:
- Steeper learning curve due to complex architecture
- Can be expensive for small-scale deployments

UiPath

Pros:
- Advanced AI and machine learning capabilities
- Easy to use and implement
- Strong community support and resources

Cons:
- Can be resource-intensive, requiring significant infrastructure
- Limited analytics and reporting capabilities compared to other tools

Challenges and Limitations of RPA in Banking & Finance

While RPA offers several benefits for banking and finance, there are also several challenges and limitations to consider:

1. Integration Complexity: RPA requires integration with existing systems and applications, which can be complex and time-consuming.

2. Data Quality Issues: RPA requires high-quality data to function effectively, which can be a challenge in open finance and open banking where data is often fragmented and inconsistent.

3. Security and Compliance: RPA requires robust security and compliance measures to ensure that sensitive data is protected, and regulatory requirements are met.

4. Lack of Standards: The lack of RPA industry standards leads to vendor lock in.

Conclusion

Robotic Process Automation (RPA) has the potential to revolutionize open finance and open banking by automating manual processing tasks, improving efficiency, and reducing errors. While there are several benefits to using RPA in open finance and open banking, there are also several challenges and limitations to consider. By understanding these benefits and challenges, financial institutions can harness the power of RPA to improve their operations, reduce costs, and enhance customer experiences.

In our next article we explore open source solutions for RPA, as well as the issue of open standards for RPA.

Back to Homepage

In this series of articles, I will highlight the importance of open standards and open source in fostering innovation in the financial services sector. This article discusses the benefits of open technology versus closed or proprietary technology. I look at the concept of openness from a standards and software source code perspective. Using the Internet as an example I show the technical, commercial, and social benefits of openness.

Introduction

According to the U.S. Department of Energy, an industry standard is "a set of criteria within an industry relating to the standard functioning and carrying out of operations in their respective fields of production. In other words, it is the generally accepted requirements followed by the members of an industry. It provides an orderly and systematic formulation, adoption, or application of standards used in a particular industry or sector of the economy. Industry standards vary from one industry to another. Industry standards facilitate global as well as domestic competitiveness."1 Industry standards can be classified as open or closed, where the free availability of the standards documents to non-industry members may be used as a prima facie determinant. Similarly, a software application may be said to be open or closed source based on the free availability of the source code. Free in both the aforementioned cases refers to the acquisition costs (gratis) and/or to the right to reuse the intellectual property (libre).

In practice, industry standards and software source code cannot adequately be classified based on the rigid dichotomy between open and closed. Diaz-Marta and Ferrandis2 highlight the need to focus on a grayscale concept called the openness of a standard or source code instead of the binary open-or-closed concept. They propose an openness criteria based on three dimensions, which I will paraphrase as membership, control, and usage. Membership looks at who is participating in the standards setting process or in writing the source code (i.e. is it open to everyone who will be using the standard or the software application?). It also looks at the degree of involvement of the participants. And finally, it looks at when participants joined the standards setting process or source code development effort. Control deals with the due process in the setting of the standard or the writing of the code. Is the process transparent? How is consensus reached, as well as equality or proportionality in the decision making. Usage deals with the general principles of non-revocability and non-conditionality. For copyrighted technologies, it deals with the public availability of code: enabling its use, inspection, modification and distribution. While for patent-protected technologies it deals with availability of access (no refusal to license, FRAND license) and pricing. Using these dimensions and criteria, Table 1 shows a taxonomy of openness adapted from Diaz-Marta and Ferrandis.

The Open Finance Team would like to extend the taxonomy into an openness index. This index may, for example, be used to compare the openness of technologies that have similar or overlapping functionalities. We invite members of the community who are interested in working on this effort with us to contact us.

Importance of Open Standards for Innovation

To highlight the immense benefits of open standards for technological and social innovation I will use the example networking protocols for computers. A network protocol is a set of standards that defines how two or more computers will communicate with each other to form a network. The standards are very detailed, they define everything from the physical medium that will be used, how this medium will be accessed, how the applications format the messages to be exchanged, to how errors and failures will be addressed among many properties and functions. In the early 1990s when I began my career as a network engineer it was common for each major computer hardware or software vendor to have their own proprietary networking protocol. For example, Microsoft had NetBEUI, Apple had AppleTalk, Digital Equipment Corporation had DECnet, IBM had SNA, Novell had the IPX/SPX protocol suite, and Hewlett Packard had JetDirect for networked printers. Figure 1 shows the cacophony of network protocols in the pre-WWW age.

If you worked at an organization that used a mix of network protocols where, for example the sales and marketing department used Apple computers and printers, the rest of the desktop users used Microsoft DOS/Windows PCs and HP printers, and the servers were from Sun Microsystems running Solaris with TCP/IP as the protocol, getting users across the organization to communicate and share digital resources was a huge challenge. According to Luoma-aho and Halonen, communication is both a facilitator and enabler of innovation,3 based on this we can conclude that the communication and data sharing challenges mentioned in the mixed network protocol scenario above would likely have hampered innovation within that organization.

The Internet is a network of networks based on an open suite of network protocols, often referred to as the TCP/IP. "The invention of the World Wide Web in 1989 by Tim Berners-Lee at CERN, as an application on the Internet, brought many social and commercial uses to what was previously a network of networks for academic and research institutions."4 Pretty soon the vendors mentioned before, in order to remain competitive, had to support TCP/IP to be able to get their users onto the Web. Given that TCP/IP is an open standard, vendors were able to relatively easily develop their own Internet-based applications, such as web servers and web browsers and users could access the data on the Internet regardless of the which vendor's product they were using. Most of the vendors with the non-Internet network protocols mentioned above soon abandoned them in favor of TCP/IP. The openness of TCP/IP has led to on-going innovations like the Web, the Cloud, social media, and many other technologies which have transformed industries and society.

According to Almeida et al.,5 the use of open standards and open-source offers the following benefits:

1. Avoid Vendor Lock-in: The use of open standards and open-source helps mitigate against vendor lock-in. Since the specifications are known and open, it is possible to get another party to develop a comparable solution that adheres to the standards.

2. Enable Interoperability: Open standards and open-source facilitate interoperability between systems from different parties who may use platforms provided and supported by competing vendors. This provides for enhanced data interchange and exchange. End users will not be required to use the same hardware or software from a specific vendor to read or write data files.

3. Mitigate Against Data Obsolesce: The use of open standards and open-source offers better protection for the data files created by an application against obsolescence of the application. It is often possible to build an older open source application in order to open obsolete data files. The same cannot be said for proprietary systems that have been discontinued.

4. Foster Innovation & Competition, and Stable Markets: Open standards and open-source enable innovation, facilitate the diffusion of new technology, expand market access, boost transparency, create market stability. The open standards process balances change and continuity in the marketplace.

There are however some potential limitations associated with the use of open standards and open-source, in particular the latter.

• Community Membership & Commitments May Vary Over Time: The continued support of an open-source project depends on an active community. In many cases membership and participation in open-source projects is voluntary. Members of an open-source project may have work commitments with other employers that demand their primary attention. At times the number of members or their commitment may decline to a level where it is no longer possible to support the open-source project.

• Customer Support May be Unpredictable: Another limitation related to the voluntary nature of the membership and participation in some open-source projects is that the level of customer support can be unpredictable. Any bug fixes or feature requests may go unattended for the smaller, less-resourced open-source projects.

Conclusion

In this article I discussed the benefits of open technology versus closed or proprietary technology. I also explored the concept of openness from a standards and software source code perspective using the earlier work of Diaz-Marta and Ferrandis. Finally, I demonstrated the technical, commercial, and social benefits of openness using the Internet’s dependence on TCP/IP as an example.

In the next installment of this series, we will look at softwarization, open-source software, open hardware, and open AI models.

Back to Homepage

The newsletter will initially focus on four areas of new technologies in finance:

• Open Banking

• Open Wallets

• Blockchains

• Robotic Process Automation

We plan to publish 3-6 articles each month, so subscribe to get notified when the latest articles are published.

We look forward to hearing back from the community.

Back to Homepage