Unleashing the Value of Open Banking

The market opportunity for developing seamless, secure, and scalable services across the UK Open Banking landscape continues to grow. More than 6.5 million users access services through open banking and APIs on a regular basis. On top of that, there was a 500% rise in payments made through open banking this past year, according to the 2022 Open Banking Report from the UK Open Banking Implementation Entity (OBIE). 

One of the key drivers for this has been the rise in consumer demand for open banking services as well as complex regulatory requirements. The opportunity for financial service providers is extensive: from accelerating the return on investment through existing investments in open banking, to developing better personalisation for end-users, and for the principles of open finance to be taken to the next level.

The Limitations of Open Banking APIs

Delivering secure Open Banking APIs is no easy undertaking, as many traditional banking providers will attest. First, there’s the raft of UK Open Banking API specifications that providers have had to align with. Since November 2018, the OBIE has released no fewer than ten iterations of the said specifications. Account Servicing Payment Service Providers (ASPSPs) have been forced to hire legions of highly specialised API developers to keep up with code control.

These Open Banking implementation teams have also been required to build their own test facilities to ensure Open Banking APIs are secured in conformance with FAPI specifications. That’s not the end of the story — these implementation teams have also been compelled to spin-up their own production facilities to support the deployment of the very same Open Banking APIs. And there’s also the challenge of managing consent flows with outdated identity and access management (IAM) infrastructure.

For all of these reasons, the appeal of Open Banking implementations, outside the fintech world, has plummeted. Furthermore, the initial excitement amongst consumers has followed suit. A recent Yapily survey of 2,000 working professionals and 500 financial decision-makers has shown that even after all the work done over the last few years to make Open Banking work for consumers, only 51% felt that their financial providers were doing enough to support them. So, where next?      

What is the future of APIs in financial services?

A recent piece from Tatsiana Kuchminskaya, CFO at Andersen suggests that the global API market value will surpass USD 21 billion by 2028. The 2020-2021 RapidAPI Developer Survey shows that over 71% of respondents were planning to use APIs more widely in 2021, as compared to 2020. And it comes as no surprise that the industries leading the API pack include telcos, healthcare providers, and financial services providers. 

But here’s the all-important ‘rub’ as Shakespeare would say: when and how does one capitalise on the custom-API revolution while benefiting from all the great work done on Open Banking APIs? Short of veering off on a tangent, the answer is simple (in contrast to the complexity of execution): leverage secure, extensible, and FAPI-compliant APIs to develop new value-added services on the back of comprehensive financial data.      

The route forward

That’s great, but if only it were so simple! Naturally, valuable things in business and life are never simple. But perhaps it’s not too much to ask for them to be simpler, easier, more secure, and faster? Especially so if financial services providers are able to bring both Open Banking test and production facilities as well as future custom API test and production facilities into one framework. 

This framework is enabled by a modern IAM infrastructure that can, in turn, handle, secure, and deliver thousands of API calls across tens of millions of identities worldwide.