Frollo Provides a Fast Track to Open Banking on AWS
Opening the Door to Open Banking
Open banking has become a reality in Australia. In July 2020, the Consumer Data Right (CDR) launched, enabling customers of the country’s four major banks to share personal banking data with accredited recipients. The CDR empowers consumers by giving them control of their financial data, allowing them to better manage their personal finances and find the products that best suit their needs.
Frollo is one of the first data recipients accredited by the Australian Competition and Consumer Commission (ACCC) to access customer banking data under the new CDR rules. The purpose-driven FinTech is on a quest to help people feel good about money. Frollo provides a simple way for consumers to turn around their finances and helps businesses do the same for their customers.
With 120,000 users to date, the Frollo consumer app allows users to securely link all of their accounts, giving them a comprehensive, aggregated view of their finances and smart insights to improve their financial wellbeing. Banks and FinTechs can leverage Frollo’s technology through its application programming interfaces (APIs), software development kits (SDKs), or white-label apps, enabling them to save time and money on software development.
“Frollo enables banks to go beyond their current capacity and develop a real engagement model that provides more money management and budgeting features for customers,” says Gareth Gumbley, founder and chief executive officer at Frollo.
We’ve benefited from proactive support from the AWS team since the start, which has accelerated our implementation efforts and led to a really rich and compliant ML process.
Founder and Chief Executive Officer, Frollo
Machine Learning Supports Data Enrichment
Data enrichment is the secret sauce in Frollo’s recipe for success. The FinTech serves B2B customers, such as Virgin Money, who turn to Frollo to provide backend APIs on a software as a service (SaaS) platform.
The Frollo Data Enrichment API provides data enrichment solutions such as categorizing customer transactions and identifying merchants. This API and supporting machine learning (ML) models sort consumer spending into more than 60 categories such as travel, taxes, and groceries.
Building Machine Learning Algorithms Independently
For Frollo to provide a high level of data granularity, it needed to establish the right infrastructure that could provide the ML tools it required. The FinTech was initially running its databases and core computing platforms on the Heroku cloud platform but wanted more independence in building and deploying ML algorithms. Frollo was also aiming to optimize its performance–cost ratio for compute-hungry ML instances.
As a result, Frollo engaged Itoc, an Amazon Web Services (AWS) Advanced Consulting Partner, who recommended Amazon SageMaker to enable its ML algorithms. Itoc assisted in setting up Amazon SageMaker within a month and was later tasked with migrating Frollo’s core workloads to AWS. “Itoc has been very helpful as an implementation consultant, making sure we are using the right tool for the right reason,” says Tony Thrassis, chief information officer at Frollo.
Frollo is now running most workloads on AWS, having chosen the platform for its data and analytics capability, built-in security controls, and ML tools. With Amazon SageMaker, Frollo’s team of data scientists appreciates that they can build their own ML algorithms and retain control over training their datasets. “With Amazon SageMaker, we’ve never had an issue with application limits or performance. We’re now measuring an end-to-end latency for transaction categorization and merchant identification of 1,500 milliseconds,” Thrassis says.
Achieving Security and Scalability for Product Reference Data
By moving its core workloads to AWS, Frollo can now access a wider range of AWS security and data management services to support new lines of business. In addition to its app and white-label solution, Frollo has introduced the AWS Cloud-native Frollo Product Reference Data (PRD) API portal, a service for banks to host their product reference data such as interest rates, fees, and eligibility criteria, which is a CDR requirement.
This form of data is usually published on banks’ websites through public APIs, which have become attractive targets for hackers. Frollo protects its applications, including its PRD Portal, from common cyberattacks such as Distributed Denial of Service (DDoS) attacks by using a combination of AWS Shield and AWS Web Application Firewall (AWS WAF). It also relies on Amazon API Gateway to create a secure, front-end access point to product reference data.
Reducing the “Time to Yes” in Loan Origination
To determine creditworthiness, lenders typically use screen scraping or manual document review. In the case of screen scraping, customers’ user IDs and passwords are used to obtain any data that a web view of their bank accounts allow, with no time limits for access.
Frollo’s secure and robust open-banking platform, on the other hand, strictly adheres to ACCC security and compliance rules. After obtaining a customer’s consent through a banking or FinTech app, Frollo APIs only access financial accounts specified by the user for a defined period up to 12 months. Frollo’s approach takes less than 20 seconds to gather information on a loan applicant’s income, liabilities, and at-risk transactions, while screen scraping typically takes between 3−5 minutes.
Gumbley adds, “The data we can deliver is richer because we can tie it back to specific transactions or credit products, which ultimately reduces risk in the lending process.” Frollo’s ML models have a categorization accuracy rate of 95 percent, which is key to providing the insights lenders need to confidently assess creditworthiness and reduce their “time to yes” for loan decisions.
Building Awareness for an Open-Banking Ecosystem
Now is prime time for FinTechs and banks to leverage the CDR to their advantage and enrich relationships with customers—or risk losing them to more agile competitors. Frollo is currently an AWS Select Technology Partner that helps other AWS customers become open-banking ready.
“We’ve benefited from proactive support from the AWS team since the start, which has accelerated our implementation efforts and led to a really rich and compliant ML process. To date, we’ve not had any occasion where a challenge couldn’t be solved together,” Gumbley says.
Frollo is an Australian FinTech that was one of the first to receive access to open-banking data under the Consumer Data Right rules. The Frollo app allows users to securely link all of their financial accounts, giving them a comprehensive view of their spending and savings.
- Ensures API latency of 1,500 milliseconds or less
- Achieves 95% accuracy rate for ML models that categorize transactions
- Reduces risk in loan origination
- Returns credit results in 20 seconds instead of 3–5 minutes
- Secures product reference data for bank
AWS Services Used
Amazon API Gateway
Amazon API Gateway is a fully managed service that makes it easy for developers to create, publish, maintain, monitor, and secure APIs at any scale.
AWS Shield is a managed Distributed Denial of Service (DDoS) protection service that safeguards applications running on AWS.
Amazon SageMaker helps data scientists and developers to prepare, build, train, and deploy high-quality machine learning (ML) models quickly by bringing together a broad set of capabilities purpose-built for ML.
AWS Web Application Firewall
AWS WAF is a web application firewall that helps protect your web applications or APIs against common web exploits that may affect availability, compromise security, or consume excessive resources.
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