When, how and where will Open APIs truly disrupt banking, and which region will lead?

30 September 2019
Phil Boland

The zeitgeist in the institutional payments air at this year’s Sibos was very definitely one of Open Banking and API’s - albeit tinged with a lack of clarity on the applicability for institutions versus retail.

Open Banking is evolving differently in the geographical regions, with regulatory frameworks varying greatly. In EMEA, with exceptions, PSD2 is a catalyst, encouraging FinTech providers to become accredited (PSP’s, AISP’s), and banks to collaborate and standardise API’s (e.g. the UK’s CMA9), but brings retail-oriented constraints. For example the signing of individual payments and assuming providers may operate on their own rather than collaborating with banks.

In APAC, with ‘softer’ regulation, banks and providers have proceeded API-wise according to their local needs. PSD2 is often cited in North America as a model to emulate, but as with APAC, providers and banks are already well advanced with their own initiatives. In EMEA, many major bank/fintech collaborative projects are due to reach fruition soon. APAC’s relative maturity will enable post-API driven advances (e.g. Open Data) and North American banks and providers, whilst lacking a single PSD2-like framework, will surely not lag behind.

We will see in 2020 whether soft or hard regulation is best for encouraging API driven institutional banking disruption.