Open banking beyond Europe's borders
The open banking revolution has only just begun. The arrival of the PSD2 payment directive has laid the foundations in European territory, and it also highlights the United Kingdom's drive with the initiative promoted by the Competition and Markets Authority. But how is open banking tackled outside the Old Continent? We review the initiatives in 8 countries around the world.
The entry into force of the PSD2 European directive in January gave the final accolade to open banking in the European Union. The objective of this regulation is to promote the development of mobile, secure and innovative payment services, opening the door to third parties for the first time. Meanwhile, in the United Kingdom, the Government created an independent body (OBIE) in which the country's major banks have participated with the aim of defining an active implementation standard since last January.
But, what's the situation with open banking beyond European borders? The following is a brief overview of the most noteworthy cases.
This is one of the countries that has closely followed the British experience, paying special attention to the implementation standard that started in the United Kingdom on January 13. Moreover, here open banking falls within defending consumer rights, which should be the main beneficiaries of this ecosystem.
The Government commissioned a broad report, presented this year, in which 50 recommendations were made on the implementation of open banking, from the regulatory framework, the type of banking data affected and the protection and security for users. It approved these conclusions in May and established an initial phase in which the country's large banks must complete opening data by July 2019.
The Government has already budgeted for a report to evaluate how to introduce open banking in the country, as well as policies that facilitate collaboration with fintechs. However, the country's main banking association has warned that it is necessary to be extremely careful with issues such as privacy, security and financial stability, although it has shown to be more receptive recently to the unstoppable advance of fintech.
The monetary authority has recently published a report on open APIs, a first step for the development of the ecosystem, with recommendations on standards and protocols, as well as an implementation schedule.
Although the Government has been discreet about its attitude towards open banking, the entry into force of the European PSD2 has served to boost the opening of the financial ecosystem in Japan. Several amendments made to Japanese Banking Law in 2017 require banks to create APIs to collaborate with fintechs within the next two years, and they envisage that at least 80 companies will embrace APIs open by 2020.
The Bank of Israel reflects in its recently published 2017 annual survey its commitment to "promote open banking through the publication of an API standard that will allow customers to transfer information and compare alternatives". The central bank, which cites the competition's drive as the engine for its decision, also points out that "banks must continue to fine tune their business models with a view to the future, assimilating innovation for the benefit of their customers and to boost their internal processes ( ...) and their competitiveness."
Only 37% of the population has a bank account, therefore, financial inclusion is among the main objectives of its transformation toward open banking.
Last March the Chamber of Deputies approved the Fintech Law, in which cryptocurrencies, APIs, crowdfunding and test sandboxes are regulated, in addition to providing a legislative framework for the so-called Financial Technology Institutions and payment services.
In a country with 4 million inhabitants, the financial ecosystem leads the open banking initiative through the industry association Payments NZ, which is already working to launch two payment APIs. The country's main banks are participating in this pilot project which is based on the British open banking standard. In addition, the country's banking authorities have also recently shown their willingness to implement open banking within its borders.
The Government is committed to an "organic transition" toward open banking, more than a coercive framework of deadlines. Consequently, the Monetary Authority of Singapore has chosen to encourage financial institutions to make use of APIs to drive innovation and interoperability. Along these lines, it has launched an API strategy book to guide those interested in the region. It considers this movement to be a priority to make Singapore a smart financial center at an international level.
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