Beyond Borders: API Harmonisation as the Key to Financial Connectivity

By Dr. Ritesh Jain

In the early days of open banking, I found myself at the forefront of discussions that were as challenging as they were inspiring. These conversations were about building a new financial ecosystem—one that put the customer at the centre, drove innovation, and levelled the playing field for financial services. At the heart of these discussions were APIs, the connectors enabling the secure and seamless exchange of data.

What became clear over time, however, was that APIs alone were not enough. While we could standardise specifications and build secure systems, the lack of harmonisation between these APIs—how they operated and interacted across institutions and jurisdictions—was a major roadblock. This fragmentation limited the scale and impact of open banking initiatives, especially when it came to cross-border payments.

Today, the same lesson echoes loudly in the evolving landscape of cross-border transactions. As highlighted in the recent BIS report, “Promoting the Harmonisation of APIs to Enhance Cross-Border Payments,” the issue is no longer just about standardisation—it is about creating a harmonised framework that fosters interoperability, security, and collaboration on a global scale.

Why Harmonisation is Critical for Cross-Border Payments

Cross-border payments form the backbone of global trade, enabling businesses and individuals to transact across borders. Yet, this lifeline of the global economy remains inefficient—fraught with high costs, long delays, and limited transparency. The G20 and Global Partnership for Financial Inclusion (GPFI) have rightly identified the enhancement of cross-border payments as a strategic priority, with APIs playing a pivotal role.

While APIs have transformed domestic payments—take India’s Unified Payments Interface (UPI) or the UK’s Open Banking initiative as examples—the cross-border context is far more fragmented. Each jurisdiction has its own API standards, leading to a patchwork of incompatible systems. This lack of harmonisation drives up costs, creates inefficiencies, and stifles innovation, particularly for smaller players looking to scale internationally.

From my experience, the issue isn’t a lack of innovation—it’s the absence of alignment. The need for harmonised APIs, capable of working seamlessly across borders, has never been more urgent.

The Difference Between Standardisation and Harmonisation

A key insight I often share is the distinction between API standardisation and API harmonisation:

• Standardisation refers to creating uniform technical specifications—protocols, data formats, and security measures—that guide how APIs are built. Standards like ISO 20022 provide a foundational language for APIs.
• Harmonisation goes beyond this by ensuring that APIs, even when developed to different standards or tailored for local needs, can operate and communicate seamlessly. It’s about building bridges between systems, not just roads within them.

For cross-border payments, harmonisation means enabling different domestic APIs to work together without extensive customisation. This is the difference between building isolated solutions and creating a globally interconnected ecosystem.

The BIS Report: A Roadmap for Harmonisation

The BIS report lays out a pragmatic, actionable framework for achieving API harmonisation. Its recommendations align closely with the lessons I’ve learned through my years of working with open banking and payments systems. Key tenets include:

Open and Inclusive Standards

Harmonisation must be built on open, consensus-driven standards that avoid proprietary lock-ins. The use of globally recognised standards like ISO 20022 is a starting point, but harmonisation must also address local adaptations to ensure interoperability.

Pre-Validation APIs

In cross-border payments, failed transactions due to incorrect or incomplete data are a significant pain point. Pre-validation APIs can address this by verifying key details—such as account numbers, currency codes, and compliance requirements—in real-time before transactions are initiated.

Security as a Foundation

Security is non-negotiable. Harmonised APIs must incorporate:

• Zero-Trust Architectures, ensuring every API interaction is authenticated and authorised.
• End-to-End Encryption to protect sensitive financial data.
• Dynamic Threat Modelling to stay ahead of emerging cyber risks.

• Developer Ecosystems

Adoption of harmonised APIs depends on empowering developers. Sandboxes, comprehensive documentation, and training programs are essential to accelerate API adoption and innovation. This is especially critical for smaller players and emerging markets.

Linking Domestic Payment Systems

The BIS’s Project Nexus is a promising initiative demonstrating how harmonised APIs can connect domestic real-time payment systems across borders. This could create a foundation for faster, cheaper, and more transparent cross-border payments.

Lessons from Open Banking

The journey of open banking offers valuable lessons for API harmonisation.

• Success Stories

• The UK’s Open Banking APIs provided a robust framework for driving competition and enabling seamless integration of third-party providers.
• India’s UPI showcased the power of a harmonised API system, enabling instant, inclusive, and interoperable payments at scale.

• Challenges

• In Europe, while PSD2 mandated API standardisation, the lack of harmonisation across member states led to fragmented user experiences and integration challenges, particularly for cross-border services.

These examples demonstrate the power of harmonisation to unlock value while highlighting the pitfalls of fragmented approaches.

Why We Must Act Now

During a recent session I led on API security, it became evident that the challenges of cross-border payments are not just technical—they are deeply rooted in governance, collaboration, and trust. Harmonisation requires more than aligning technology; it demands a multi-stakeholder approach involving regulators, financial institutions, and technology providers.

From my perspective, three critical areas must be prioritised:

1. Collaboration Across Borders: A coordinated effort among regulators and private entities is essential to align API implementations.
2. Public-Private Partnerships: Governments and industry players must co-invest in infrastructure, training, and innovation to drive adoption.
3. Future-Proofing APIs: Harmonisation efforts must be flexible enough to accommodate emerging technologies like blockchain and Central Bank Digital Currencies (CBDCs).

Conclusion: A Borderless Financial Ecosystem is Within Reach

As I reflect on my journey with open banking and cross-border payments, the message is clear: harmonisation is the linchpin for a truly interconnected financial ecosystem. APIs, when harmonised, can reduce costs, enhance transparency, and drive innovation, fulfilling the G20’s vision for inclusive and efficient cross-border payments.

The BIS report provides a strong roadmap, but its success depends on collective action and decisive leadership. We need to move beyond incremental improvements and embrace bold, collaborative strategies. The future of financial services—and the billions of people and businesses that rely on them—depends on our ability to harmonise, innovate, and act swiftly.

The time to build this borderless ecosystem is now.

Dr. Ritesh Jain is a global expert in financial services, technology, and digital transformation. With decades of experience in open banking, payments, and API security, he continues to shape the future of financial ecosystems.