A catalyst in the growth of Open Banking, open APIs have increased connectivity between banks and third-party providers and revolutionized the banking industry for the better. Open APIs have enabled collaboration over competition between banks and fintech companies.
Application Programming Interfaces (APIs), a fairly mature technical framework, is a structured mechanism where two systems can trade information with one another. Open APIs are a combination of API technology and modern-day thinking about investing in collaboration. Open APIs in the financial services industry are employed to facilitate open banking and build applications and services around a financial institution or a bank also called digital financial solutions. The technology is facilitating financial transparency like never before and is helping banks and financial institutions to innovate and create new revenue models in order to sustain in the digital world.
Streamlining Back Office Automation in Banks with Open API Application
Various financial institutions and banks have been restrictive about shifting towards open banking APIs. However, various regulations like PSD2 in Europe, the Monetary Authority of Singapore, and the CMA in the UK have accelerated this shift to foster greater collaboration among financial institutions. Such regulations mandate banks to open their business territories and the accounts of their customers to external parties to create different types of new market participants that provide customers with additional services.
With open APIs, speed is one of the key benefits for banks. A traditional bank transfer typically takes 5 business days, and such delays can be resolved with open APIs that enable real-time transactions for customers who need immediate transfers. Further on, with Open Banking, banks can also considerably decrease the time taken to share data. It allows the banks to offer numerous services through a personal financial management platform that aggregates different accounts conveniently in a single application.
5 Leading Banks Enabling Innovation with Open Banking
Although Open Banking services force traditional banks to either enhance their financial services or partner with fintech firms to develop a brand-new mobile banking solution, countries globally have accelerated the Open Banking revolution by imposing regulations. Let’s look at 5leading examples of how banks integrated their businesses with Open Banking APIs.
HSBC Bank, a British multinational investment bank and financial services holding company rolled out its Connected Money app in May 2018 as a response to the UK's open banking regulations that placed more control of financial data into the hands of consumers in the country. Users of Connected Money can view various bank accounts, loans, mortgages, and credit cards, in a single place.
Barclays, a British multinational universal bank, headquartered in London claims to be the first UK bank to enable account aggregation in its mobile banking application. With Barclays’ open banking service users can access their accounts with other banks within the same mobile application.
Kotak Mahindra Bank
Kotak Mahindra Bank Limited- an Indian banking & financial services company announced the launch of its open banking platform in November 2018. The solution makes Kotak’s APIs available to fintech firms and developers, thus creating a collaborative ecosystem. Alongside, users of Kotak Mahindra Bank benefit from superior financial services
With the help of its fintech partner, Deutsche Bank, a German multinational investment bank and financial services company offers a white label solution that enables it to offer deposit products from other banks to its customers. The market is fully integrated into Deutsche Bank’s online banking and is also offered as a service through user consultants at the bank’s branches and has over seven million German customers. The users of the bank can effortlessly develop a portfolio of deposit products through their main bank account.
In 2018, BBVA, a Spanish multinational financial services company launched its BaaS platform, Open Platform, in the US. Open Platform by BBVA employs APIs that allow third-party providers to offer financial products to their users without the need to provide a complete suite of banking services.
Develop a Personalized API Platform for Your Customers
The adoption of open banking regulatory initiatives is likely to continue and accelerate in the coming years, as more regulators of most countries are looking for ways to support competition and innovation in the banking sector. Also, open banking is furthering digitalization while aiding in the response to the Coronavirus pandemic. In the contemporary situation, banks and regulators need to ensure the promised benefits materialize and address concerns like data security and infrastructure compatibility in the ecosystem.
Core Banking System by Panamax - a global leader in developing FinTech and telecommunication technologies, performs basic bank transactions such as credit processing, loans, standing instructions, deposits, and much more effectively. Its Graphical User Interface (GUI) based API module provides seamless API integrations and enables customers to control their accounts better. It allows quick dynamic setup, provides adapter for incoming API, ease in vendor integration and configuration for outgoing API and quick access across various access channel making your services accessible to the customers.