APIs: the common link between banks and fintechs
Banks and fintechs are choosing APIs as one of the essential links in the incipient financial collaboration ecosystem, also boosted by the entry into force of regulations such as PSD2.
The metamorphosis of the financial sector is a reality. "Our environment is evolving, not only because of the entry into force of PSD2, but also because of the introduction of new disruptive business models thanks to new technological capabilities that allow us to do things differently and generate value for the client," explained Ana Climente, head of Advisory Solutions and Digital transformation for Enterprises at BBVA, during the event "APIs in the Fintech world" at BBVA Open Space, on March 28.
Consumers are looking for financial institutions to help them make better decisions through a smooth user experience. In addition, they demand personalized services in real time.
However, Climente added that "so far, security conditions and the responsibilities of these new players were not properly defined." A situation which is partially corrected by the entry into force of instruments such the General Data Protection Regulation (GDPR), the e-IDAS regulation and, above all, the PSD2 directive, which requires that traditional financial institutions give third parties access to their clients' accounts.
The regulatory framework "is designed to regulate this new environment with the arrival of new players; it fosters the increase in competition and will cause an improvement in the range of services and the security of clients, and this would be the ultimate goal," said the BBVA executive.
APIs have consolidated their role as the connection tool in this incipient ecosystem. The number of APIs has increased exponentially in recent years and the financial world stands out among its main drivers, stated Marco Antonio Sanz, CEO of CloudAppi at BBVA Open Space.
BBVA is good example of the boost from the sector. The platform BBVA API_Market was rolled out in 2017 and launched commercially in 2018, offering 11 APIs in Spain and three in Mexico. At the end of the year, BBVA Open Platform was also rolled out in the United States; this is BBVA's Banking as a Service platform with four APIs.
This investment began seven years ago, as mentioned by Sanz, who was then working at BBVA. The progress of APIs, the CEO of CloudAppi explained, indicates not only a technological advance, "but also a change in philosophy that anticipates a transformation of our way of thinking and interacting with companies."
Startups such as Finect find in "APIficiation" a boost to their business. "Our business model is to help people to buy and the financial institution to sell," explained Rafael Casado, COO of this "social network specialized in finance and technological tools for investment decision-making." The goal is precisely "to offer our services through APIs, rather than a website, so that they reach the client when they need them, as soon as problems happen."
APIs at the core
The PSD2 directive establishes the bases of the relationship between payment providers (banks and major financial institutions) and other companies, but it also aims to ensure the security of clients and their transactions, and APIs have emerged as the perfect tool to carry this out: "We prefer that third parties relate to us via APIs." It is much cleaner, more agile and safer for all," said Climente.
Technology companies are the other side of the same coin. Ernesto Arroyo and Benito Méndez presented Eurobits as the first authorized Spanish company in the Bank of Spain's special register as account information service providers. At BBVA Open Space, they both explained how they are adapting their APIs to the new regulation, for example with respect to managing the clients' consent to accessing their data, which must be renewed every 90 days as per the regulation.
Meanwhile, Jesús Ángel Sáenz Viguera, an expert in development and integration at IBM, pointed out the appropriateness of API management platforms, such as IBM's, to deal with the ecosystem's three main challenges: the need to comply with the various domestic and supranational regulations; security and reliability thanks to a good infrastructure of exposure to APIs; and maintaining the trust of users not used to operating through third parties.
Undoubtedly, as Climente said at the end of her presentation, "PSD2 is the starting point of a new financial ecosystem. It's in our hands to leverage these new opportunities for creating differential services for clients, who, in the end, must be the main beneficiaries of this new context."
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