BBVA API Market
The entry into force of the PSD2 European directive in January gave the final accolade to open banking in the European Union. The objective of this regulation is to promote the development of mobile, secure and innovative payment services, opening the door to third parties for the first time. Meanwhile, in the United Kingdom, the Government created an independent body (OBIE) in which the country’s major banks have participated with the aim of defining an active implementation standard since last January.
But, what’s the situation with open banking beyond European borders? The following is a brief overview of the most noteworthy cases.
This is one of the countries that has closely followed the British experience, paying special attention to the implementation standard that started in the United Kingdom on January 13. Moreover, here open banking falls within defending consumer rights, which should be the main beneficiaries of this ecosystem.
The Government commissioned a broad report, presented this year, in which 50 recommendations were made on the implementation of open banking, from the regulatory framework, the type of banking data affected and the protection and security for users. It approved these conclusions in May and established an initial phase in which the country’s large banks must complete opening data by July 2019.
The Government has already budgeted for a report to evaluate how to introduce open banking in the country, as well as policies that facilitate collaboration with fintechs. However, the country’s main banking association has warned that it is necessary to be extremely careful with issues such as privacy, security and financial stability, although it has shown to be more receptive recently to the unstoppable advance of fintech.
The monetary authority has recently published a report on open APIs, a first step for the development of the ecosystem, with recommendations on standards and protocols, as well as an implementation schedule.
Although the Government has been discreet about its attitude towards open banking, the entry into force of the European PSD2 has served to boost the opening of the financial ecosystem in Japan. Several amendments made to Japanese Banking Law in 2017 require banks to create APIs to collaborate with fintechs within the next two years, and they envisage that at least 80 companies will embrace APIs open by 2020.
The Bank of Israel reflects in its recently published 2017 annual survey its commitment to “promote open banking through the publication of an API standard that will allow customers to transfer information and compare alternatives”. The central bank, which cites the competition’s drive as the engine for its decision, also points out that “banks must continue to fine tune their business models with a view to the future, assimilating innovation for the benefit of their customers and to boost their internal processes ( …) and their competitiveness.”
Only 37% of the population has a bank account, therefore, financial inclusion is among the main objectives of its transformation toward open banking.
Last March the Chamber of Deputies approved the Fintech Law, in which cryptocurrencies, APIs, crowdfunding and test sandboxes are regulated, in addition to providing a legislative framework for the so-called Financial Technology Institutions and payment services.
In a country with 4 million inhabitants, the financial ecosystem leads the open banking initiative through the industry association Payments NZ, which is already working to launch two payment APIs. The country’s main banks are participating in this pilot project which is based on the British open banking standard. In addition, the country’s banking authorities have also recently shown their willingness to implement open banking within its borders.
The Government is committed to an “organic transition” toward open banking, more than a coercive framework of deadlines. Consequently, the Monetary Authority of Singapore has chosen to encourage financial institutions to make use of APIs to drive innovation and interoperability. Along these lines, it has launched an API strategy book to guide those interested in the region. It considers this movement to be a priority to make Singapore a smart financial center at an international level.
Carlos López-Moctezuma analyzes the present and future of open banking in a roundtable dedicated to this matter, where essential questions such as user growth curve, the role played by fintech and the profound evolution that banks such as BBVA and others have experienced in the past few years.
Open banking is driving the development of new apps that are integrated into company platforms, all in an effort to offer banking services to customers. Thanks to APIs, any banking operation, such as opening an account, can be done without the need to exit an application.
Open banking has changed the financial paradigm as we have known it so far. The widespread use of new digital platforms, connected devices and technology consumers has led to a boom in business opportunities for every company, many of which are already leveraging their benefits as much as possible.