How open API banks change the financial world
The financial industry is undergoing a digital revolution. Conservative banks follow modern trends and are beginning to provide information to third parties, which was previously considered bank secrecy. Why this happens, to whom and why it is needed - we will look into this article.
The trend originated in Europe, for example, in Germany, the Open Bank Project has been developing since 2010 - a project that supports disclosure of bank data and is supported by the largest banks in the country.
In the UK, in September 2015, with the support of public authorities, the Open Banking Standard initiative was launched, which is aimed at increasing competition and availability of services in the financial market. According to the initiative, banks should provide third parties (so-called financial and technical companies) with data on the balance of customers and access to their current accounts. The application of the principle of open banking data has become mandatory for 9 large UK banks, which serve more than 80% of the country's citizens.
The transfer and provision of information is carried out using the program interface (API) or the Application Programming Interface, which in Russian means “application programming interface”. In simple words, this is a list of commands, requests, responses, with the help of which computer programs exchange information with each other and interact, “forcing” each other to perform some actions.
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An example of using the API is mobile banking applications that allow a customer to check their balance, make a payment and make other banking transactions directly from their mobile device.
The trend, which is gaining popularity in the world, is to provide banking APIs to all organizations that are going to work in the financial sector. This approach offers a number of advantages for both banks and consumers.
For example, the opportunity to create a universal mobile application, through which users can see the information on each bank, the client of which they are. Previously, for each bank, the user needed separate applications, which complicated the choice of current offers and services provided by banks.
Multi-banking application allows you to:
As a result, customers do not need to use various communication channels and applications for routine banking operations, banking becomes convenient, intuitive and comfortable.
Open access to the banking API is also beneficial for banks:
As you can see, the decision on an open banking API brings benefits to all parties to the process. Now we will consider how this concept is applied in different countries of the world.
Since January 2018, the PSD 2 (European Payment Directive) standard has been in force in the European Union countries, which obliges banks to provide client databases and program interfaces (APIs) for third parties who intend to work in the financial sector. Thus, it is planned to increase competition in the market of mobile online payments by entering the market of technology companies.
In the US, there is no government regulation of the issue of open API banks. Nevertheless, a favorable financial environment led to the creation of a banking aggregator for the company Mint, whose site in 2016 was used by about 20 million residents of the United States and Canada.
In Singapore, the Monetary Authority (MAS) supports the principles of an open banking API. The Association of Banks of Singapore (ABS) and MAS prepared a Finance-as-a-Service document: API Playbook, containing information and recommendations for the financial sector and designed to ensure the effective exchange of financial information, as well as create the ground for the launch of innovative banking projects.
In India, an information platform was created for the open API India Stack, which includes such systems and services as: Aadhaar - the world's largest digital biometric identification system; National Payment Corporation of India; Digital locker - a platform for the formation and verification of documents in digital form, etc.
IndiaStack allows developers and technology satrap to enter the mobile application market to identify and authenticate users of financial services.
In 2016, a FinTech organization was established on the initiative of Sberbank, Alfa-Bank and other financial companies in Russia, the purpose of which is to develop financial technologies in the country. Also, FintekhSmart is developing in Russia - an association-trade union dealing with the development of environment for financial start-ups and the RusFinTech community, which organizes seminars and conferences on the topic of financial technologies.
Speaking about the prospects for the development of open banking APIs in Russia, it is worth mentioning the initiative launched by the Bank of Russia together with fintech organizations.
This direction involves the development of open API application scenarios, pilot projects, as well as the development of standards and documents on the use of open APIs in Russia. Already, the country's largest banks, such as Sberbank, Alfa-Bank, VTB 24, Gazprombank and Otkritie Bank, are ready to provide their API to third-party organizations.
The trends in the development of open banking APIs indicate that the direction of developing mobile applications for fintech organizations, namely multi-banking applications in Russia, will become relevant in the near future. According to the research agency Markswebb, 18 million people use mobile banks in the territory of the Russian Federation, which is about 33% of the country's total Internet audience. At least one Internet bank is used by 35.3 million people, or 64.5% of all Russian Internet users. The age of Internet and mobile banking users ranges from 18 to 64 years.
Wellsoft clients from the financial sector are already showing interest in this area and are exploring the possibility of developing a multi-bank application using open APIs.
Experience Wellsoft in the development of mobile applications for banks allows you to implement such solutions at the moment if the client wishes.
Bank Disclosure
The trend originated in Europe, for example, in Germany, the Open Bank Project has been developing since 2010 - a project that supports disclosure of bank data and is supported by the largest banks in the country.
In the UK, in September 2015, with the support of public authorities, the Open Banking Standard initiative was launched, which is aimed at increasing competition and availability of services in the financial market. According to the initiative, banks should provide third parties (so-called financial and technical companies) with data on the balance of customers and access to their current accounts. The application of the principle of open banking data has become mandatory for 9 large UK banks, which serve more than 80% of the country's citizens.
Using API technology
The transfer and provision of information is carried out using the program interface (API) or the Application Programming Interface, which in Russian means “application programming interface”. In simple words, this is a list of commands, requests, responses, with the help of which computer programs exchange information with each other and interact, “forcing” each other to perform some actions.
')
An example of using the API is mobile banking applications that allow a customer to check their balance, make a payment and make other banking transactions directly from their mobile device.
Opportunities and benefits of an open banking API
The trend, which is gaining popularity in the world, is to provide banking APIs to all organizations that are going to work in the financial sector. This approach offers a number of advantages for both banks and consumers.
For example, the opportunity to create a universal mobile application, through which users can see the information on each bank, the client of which they are. Previously, for each bank, the user needed separate applications, which complicated the choice of current offers and services provided by banks.
Multi-banking application allows you to:
- See your balance online and conveniently manage your accounts in different banks.
- Simplify trading operations (choosing a bank for payment, quick credit check, making a payment from an application).
- Implement mortgage / credit applications that can confirm the solvency of citizens from a mobile device, simplify the process of obtaining a mortgage / loan.
As a result, customers do not need to use various communication channels and applications for routine banking operations, banking becomes convenient, intuitive and comfortable.
Open access to the banking API is also beneficial for banks:
- Banks will expand distribution channels of their financial products and services with the help of third-party organizations and information systems.
- Expansion of distribution channels - the potential for increasing the bank's customer base.
- Banks will have access to information and services of third-party organizations, which will provide an opportunity to better understand the trends emerging in the field of financial services.
- Finally, an open API will provide an opportunity to follow the new market from the inside and perhaps outbid the organization behind the most successful developments in this area to strengthen its own position in the market.
As you can see, the decision on an open banking API brings benefits to all parties to the process. Now we will consider how this concept is applied in different countries of the world.
Experience of using open banking API
Since January 2018, the PSD 2 (European Payment Directive) standard has been in force in the European Union countries, which obliges banks to provide client databases and program interfaces (APIs) for third parties who intend to work in the financial sector. Thus, it is planned to increase competition in the market of mobile online payments by entering the market of technology companies.
In the US, there is no government regulation of the issue of open API banks. Nevertheless, a favorable financial environment led to the creation of a banking aggregator for the company Mint, whose site in 2016 was used by about 20 million residents of the United States and Canada.
In Singapore, the Monetary Authority (MAS) supports the principles of an open banking API. The Association of Banks of Singapore (ABS) and MAS prepared a Finance-as-a-Service document: API Playbook, containing information and recommendations for the financial sector and designed to ensure the effective exchange of financial information, as well as create the ground for the launch of innovative banking projects.
In India, an information platform was created for the open API India Stack, which includes such systems and services as: Aadhaar - the world's largest digital biometric identification system; National Payment Corporation of India; Digital locker - a platform for the formation and verification of documents in digital form, etc.
IndiaStack allows developers and technology satrap to enter the mobile application market to identify and authenticate users of financial services.
Experience of using open banking API in Russia
In 2016, a FinTech organization was established on the initiative of Sberbank, Alfa-Bank and other financial companies in Russia, the purpose of which is to develop financial technologies in the country. Also, FintekhSmart is developing in Russia - an association-trade union dealing with the development of environment for financial start-ups and the RusFinTech community, which organizes seminars and conferences on the topic of financial technologies.
Speaking about the prospects for the development of open banking APIs in Russia, it is worth mentioning the initiative launched by the Bank of Russia together with fintech organizations.
This direction involves the development of open API application scenarios, pilot projects, as well as the development of standards and documents on the use of open APIs in Russia. Already, the country's largest banks, such as Sberbank, Alfa-Bank, VTB 24, Gazprombank and Otkritie Bank, are ready to provide their API to third-party organizations.
The trends in the development of open banking APIs indicate that the direction of developing mobile applications for fintech organizations, namely multi-banking applications in Russia, will become relevant in the near future. According to the research agency Markswebb, 18 million people use mobile banks in the territory of the Russian Federation, which is about 33% of the country's total Internet audience. At least one Internet bank is used by 35.3 million people, or 64.5% of all Russian Internet users. The age of Internet and mobile banking users ranges from 18 to 64 years.
Wellsoft clients from the financial sector are already showing interest in this area and are exploring the possibility of developing a multi-bank application using open APIs.
Experience Wellsoft in the development of mobile applications for banks allows you to implement such solutions at the moment if the client wishes.
Source: https://habr.com/ru/post/420253/
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