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Open Finance: Reality or Hype?

3 minutes read

Open Banking has reshaped the fintech industry. Customers want a seamless experience with more convenient and flexible access to services. Technological innovation and digital transformation have led to the emergence of neobanks which offer a banking experience similar to delivery apps. Now the customers can avail of services like opening an account in minutes. In the last few years, another new concept- Open Finance has joined the queue. What exactly is open finance? Is it just hype or reality? And how open finance might improve customer experience (CX). These are some of the questions that we’re going to talk about in this blog. 

Open Banking

In open banking, banks and other financial institutions allow third-party financial service providers to access the bank’s customers’ data via APIs (application programming interfaces). This helps banks to create more personalized offerings and meet the changing needs of their customers.

What is Open Finance?

Open Banking and Open Finance are similar. However, Open Finance is slightly more advanced in the process. Simply put, it is the next step in open banking. 

Open Finance is a more customer-centric approach. It gives users a safe and dependable way to share their data with the financial tools and apps they prefer to use.

How is Open Finance different from Open Banking?

How is Open Finance different from Open Banking?

Source: Accenture

Open Banking has certain limitations when it comes to sharing of financial data. Here, only that data can be shared which is related to financial operations made within the bank’s app or in a branch office. Open finance goes beyond this limitation.

In Open Finance, non-banking financial data including mortgages, savings, pensions, insurance, and consumer credit – basically your entire financial footprint – could be opened up to trusted third-party APIs if you agree.

Open finance will help open new gateways for financial institutions to improve CX. Let’s dig deeper to understand how this concept will change CX in the Fintech world for the next-Gen customers. 

  1. 360-degree Customer Insights: Data acts as a tool to study deeply about your customers. Organizations can analyze the customer data and extract some valuable insights to design the complete customer journey. Open Finance opens a more secure pathway for financial institutions and gives a more complete picture of their customer’s finances. 
  2. Partnerships & Collaborations: With open finance, comes an opportunity for the financial institutions to network and collaborate with various providers. This means they could deliver a wider variety of services based on consumer data, uncovering new business models and innovations.
  3. Transparency for the Lenders: Lenders can evaluate and measure the creditworthiness of potential borrowers, audit documents, and offer customized solutions by securely collecting customer data. Machine learning algorithms may help to extract valuable insights from raw data.

Open Finance offers freedom and flexibility to consumers giving more options and control over the data they share and how they engage with their finances. With just 8 seconds of attention span, the new age consumers want better experiences to get hooked to one brand. Open finance creates unparalleled access to a broader range of products and services. With data sharing, banking organizations can keep track on the changing customer expectations who want frictionless interactions and hyper-personalized experiences across all touchpoints of the customer journey.

The Road Ahead

Statista predicts that there will be 63.8 million open banking users globally by 2024, increasing at an average annual rate of about 50% between 2020 and 2024. This means there will be more demand for innovative products and services in the industry. Banking organizations would need to analyze the rising customer expectations more closely than ever. And for this, data would act as a key to designing the experience of tomorrow. 

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Implementing a Clean Architecture with Nest.JS

4 minutes read

This article is for enthusiasts who strive to write clean, scalable, and more importantly refactorable code. It will give an idea about how Nest.JS can help us write clean code and what underlying architecture it uses.

Implementing a clean architecture with Nest.JS will require us to first comprehend what this framework is and how it works.

What is Nest.JS?

Nest or Nest.JS is a framework for building efficient, scalable Node.js applications (server-side) built with TypeScript. It uses Express or Fastify and allows a level of abstraction to enable developers to use an ample amount of modules (third-party) within their code.

Let’s dig deeper into what is this clean architecture all about. 

Well, you all might have used or at least heard of MVC architecture. MVC stands for Model, View, Controller. The idea behind this is to separate our project structure into 3 different sections.

1. Model: It will contain the Object file which maps with Relation/Documents in the DB.

2. Controller: It is the request handler and is responsible for the business logic implementation and all the data manipulation.

3. View: This part will contain files that are concerned with the displaying of the data, either HTML files or some templating engine files.

To create a model, we need some kind of ORM/ODM tool/module/library to build it with. For instance, if you directly use the module, let’s say ‘sequelize’, and then use the same to implement login in your controller and make your core business logic dependent upon the ‘sequelize’. Now, down the line, let’s say after 10 years, there is a better tool in the market that you want to use, but as soon as you replace sequelize with it, you will have to change lots of lines of code to prevent it from breaking. Also, you’ll have to test all the features once again to check if it’s deployed successfully or not which may waste valuable time and resource as well. To overcome this challenge, we can use the last principle of SOLID which is the Dependency Inversion Principle, and a technique called dependency injection to avoid such a mess.

Still confused? Let me explain in detail.

So, what Dependency Inversion Principle says in simple words is, you create your core business logic and then build dependency around it. In other words, free your core logic and business rules from any kind of dependency and modify the outer layers in such a way that they are dependent on your core logic instead of your logic dependent on this. That’s what clean architecture is. It takes out the dependency from your core business logic and builds the system around it in such a way that they seem to be dependent on it rather than it being dependent on them.

Let’s try to understand this with the below diagram.

Source: Clean Architecture Cone 

You can see that we have divided our architecture into 4 layers:

1. Entities: At its core, entities are the models(Enterprise rules) that define your enterprise rules and tell what the application is about. This layer will hardly change over time and is usually abstract and not accessible directly. For eg., every application has a ‘user’. What all fields the user should store, their types, and relations with other entities will comprise an Entity.

2. Use cases: It tells us how can we implement the enterprise rules. Let’s take the example of the user again. Now we know what data to be operated upon, the use case tells us how to operate upon this data, like the user will have a password that needs to be encrypted, the user needs to be created, and the password can be changed at any given point of time, etc.

3. Controllers/Gateways: These are channels that help us to implement the use cases using external tools and libraries using dependency injection.

4. External Tools: All the tools and libraries we use to build our logic will come under this layer eg. ORM, Emailer, Encryption, etc.

The tools we use will be depending upon how we channel them to use cases and in turn, use cases will depend upon the entities which is the core of our business. This way we have inverted the dependency from outwards to inwards. That’s what the Dependency Inversion Principal of SOLID implies.

Okay, by now, you got the gist of Nest.JS and understood how clean architecture works. Now the question arises, how these two are related?  

Let’s try to understand what are the 3 building blocks of Nest.JS and what each of them does.

  1. Modules: Nest.JS is structured in such a way that we can treat each feature as a module. For eg., anything which is linked with the User such as models, controllers, DTOs, interfaces, etc., can be separated as a module. A module has a controller and a bunch of providers which are injectible functionalities like services, orm, emailer, etc.
  1. Controllers: Controllers in Nest.JS are interfaces between the network and your logic. They are used to handle requests and return responses to the client side of the application (for example, call to the API).
  1. Providers (Services): Providers are injectable services/functionalities which we can inject into controllers and other providers to provide flexibility and extra functionality. They abstract any form of complexity and logic.

To summarize,

  • We have controllers that act as interfaces (3rd layer of clean architecture)
  • We have providers which can be injected to provide functionality (4th layer of clean architecture: DB, Devices, etc.)
  • We can also create services and repositories to define our use case (2nd Layer)
  • We can define our entities using DB providers (1st Layer)

Conclusion:

Nest.JS is a powerful Node.JS framework and the most well-known typescript available today. Now that you’ve got the lowdown on this framework, you must be wondering if we can use it to build a project structure with a clean architecture. Well, the answer is -Yes! Absolutely. How? I’ll explain in the next series of this article. 

Till then, Stay tuned!

About the Author:

Junaid Bhat is currently working as a Tech Lead in Mantra Labs. He is a tech enthusiast striving to become a better engineer every day by following industry standards and aligned towards a more structured approach to problem-solving. 


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