The World of Open Banking

Open  banking is not just for Europe, although many of us sitting in Europe probably think it is.  Many other markets around the world have been noticing what Europe is up to and other countries and regions are also looking to adopt similar principles with the ultimate view of delivering better customer financial outcomes.

USA

Stakeholders in the United States are inching toward a more formalized regime for third-party data sharing. These stakeholders include financial institutions, consumer-facing fintech services, trusted intermediaries, regulators, lawmakers, industry working groups (such as FS-ISAC and NACHA), and of course, consumers.  Large banks are entering into data sharing arrangements with individual partner organisations, however, there is no doubt that open banking, albeit a different flavour to PSD2, will arrive in the US in the not too distant future.

Australia

Australia has moved one step closer to implementing an open banking regime with the publication of a final Government report into the issue.Open banking in Australia aims to be a game changer leading to better deals on mortgages, personal loans and small businesses loans. Open banking will give consumers more choice of financial services providers, a greater understanding of their financial standing and overall more control over their financial future.

Hong Kong

The Hong Kong Monetary Authority (HKMA) publishes its draft Open API framework. Publication of the framework – on 11th January – marked the start of a public consultation.

• The aims of the HKMA’s Open API framework include:
• Increase the competitiveness of Hong Kong’s banking sector
• Generate opportunities to reach out to untapped markets through better customer experience
  • Define Open API use cases and deployment timeframes
  • Recommend Open API technical standards
  • Recommend Open API facilitation measures

Singapore

The Monetary Authority of Singapore (MAS) is very vocal about encouraging financial institutions to adopt APIs as a key foundation layer for innovation and interoperability.

MAS are known for their progressive, forward thinking approach to the role financial technology can have in their local economies, and so it comes as no surprise, that Singapore is looking at open banking as a way to broaden choice and foster competition in their local market.

The following chart shows open banking readiness across the whole Asian region:

India

Whilst the regulators have not yet commented on open banking, a number of commentators have started noting that India overall is in an excellent position to take forward open banking quickly, in the context of 29 states and 1.25 billion people they have already implmenented:

• Aadhaar: The largest central database of biometrics-based identity information in the world.
• IMPS: An instant payment infrastructure with sizeable transaction volumes operational since 2010 – something most countries in the world are currently working hard to implement.
• UPI: A peer-to-peer payments scheme that bypasses all intermediaries and encourages competition and cost savings – something the likes of the EU has just woken up to with PSD2.
• Functional versatility of India stack – whereas most such others worldwide are confined to identity and KYC services.
• Upcoming policy frameworks on account aggregation, P2P lending, blockchain and its own cryptocurrency.
• This puts India in a better position than other markets to leapfrog FinTech growth and concurrently redefine the experience of digital consumption of banking products and services.

At Konsentus we are of course very happy to see this global expansion of open banking.  Although each market may look to deliver a slightly different flavour we are confident that all will require some form of permission and consent management for the open banking APIs and this is what we are delivering.