Open Banking APIs Worldwide A country-by-country guide to Open Banking APIs with analysis which regions are driving the global evolution of networked financial ecosystems. Management Summary The ripple effects of Open Banking can now spread and important are these changes, be felt across the world. But why is it caus- that ndgit is dedicating a second white paper ing such endemic and sustainable change? to the topic. According to our analysis, key drivers are: changing customer behaviour, increasing In our first paper „Open Banking – The Glob- networking among banks, the rise of ecosys- al Revolution in Banking“, we embarked on a tems and the emergence of new supporting journey around the world by means of quali- API technologies. tative analysis - giving some broad insights on market developments across the various re- While some consider PSD2 in the EU as- syn gions. We were delighted with the consider- onymous with open banking, our findings able interest that this content piece received. clearly show that it’s really only a ‘stimulus’ to opening-up banks. To this end, similar aspira- Readers of the new whitepaper can expe- tions for Open Banking APIs are now being rience a unique country ranking model, de- seen worldwide – already touching more than veloped exclusively by ndgit. This is based on Open Banking Status 50 countries and affecting more than 10,000 four factors: the spread of Open APIs, regula- A comparison of Regulatory requirements, Standardisation Initiatives banks. tory requirements, standardisation initiatives and TPP regulation and the presence of a central TPP regulatory Open banking is reshaping the banking in- body. dustry on a local and global level. So wide- 20 20 20 ndgit’s open banking leader board 15 15 11 10 10 10 1. EU + EEA + UK 10. Malaysia 19. South Africa 2. Australia 11. Canada 20. USA 5 4 3. Hong Kong 12. Thailand 21. New Zealand 4 5 4 4 5 4. Bahrain 13. Ruanda 22. Chile 5. Japan 14. India 23. Nigeria 6. South Korea 15. Switzerland 7. Brazil 16. Indonesia yes yes early stages early planned no established planned no advanced 8. Mexico 17. China 0 developing 0 0 9. Singapore 18. Kenya Regulatory Standardisation Central TPP requirements Initiatives regulation 2 Open Banking APIs worldwide Management Summary Open Banking APIs worldwide Open Banking Status 3 Table of Introduction contents Banks are already in the midst of digital trans- support. At the same time, payments have formation. Operations and business process- been accelerated and simplified with, for es are being digitised, with paper documents example, electronic billing, contactless pay- being replaced with automated, electronic ment, Apple Pay and Google Pay. With their 1. Management Summary 2 d) Australia & New Zealand 40 options. Bank customers are also increasing- new, ultra-convenient processes, ‘first-pio- 2. Introduction 5 Australia 41 ly benefiting from new online and mobile neers’ are slowly creating new customer -ex New Zealand 42 3. What is open banking? 5 banking services. Once lengthy and unpleas- pectations. Increasing competitive pressure, e) Africa 43 Open Banking as a consequence 6 ant procedures, such as loan applications, are this is setting new standards for the financial Ruanda 44 of new value chains now handled much faster, with new features ‘experience’. Those that cannot deliver, will Kenya 44 New customer needs 7 such as digital-identity and video onboard- fall behind. The wholesale disruption of the New technologies 7 Nigeria 45 ing, verification and authentication reducing financial market – similar to that previously Competition 8 South Africa 45 time and effort. Chatbots and Robo-Advisory seen in sectors such as the media industry – is Regulatory requirements and standards 9 6. Platforms and Ecosystems 47 Services offer new levels of consultancy and already in full swing. 4. From Open Banking APIs to Ecosystems 9 7. Key Take Aways 49 Legally driven minimal approach 10 8. ndgit Open Banking Plattform 50 Banking-as-a-Service (BaaS) 11 9. Authors 50 Innovations with FinTech APIs 12 Banking Ecosystems 13 5. Open Banking APIs worldwide 14 a) Europe 20 European Union and EEA 21 United Kingdom 21 Innovators in Whatthe is OpenEU Banking? 22 Switzerland 24 b) America 25 Brazil 26 Mexico 27 Canada 27 The term open banking is currently used in two A significant evolutionary step towards this is USA 29 different ways. Some banks use open banking the second Payment Service Directive (PSD2). Chile 30 to merely publish Open APIs, so third-party Through this, the European Union is commit- providers (TPPs) can access the data. At ted to providing its banks with Open Banking c) Asia 31 ndgit, however, we believe that open bank- APIs for regulated third-party providers, start- Hong Kong 32 ing is much more than that as it also involves ing this year. The resulting PSD2 APIs can be Japan 33 opening up bank services and infrastructures seen as a precursor and important driver for South Korea 33 to TPPs allowing them to develop new inno- open banking. Bahrein 34 vative applications for their end customers Singapore 35 based on Open Banking APIs. This gives bank Thailand 36 customers the opportunity to carry out their Malaysia 37 financial business using new customer-cen- China 37 tric applications from non-banks, alongside Indonesia 38 their own bank‘s e-banking services. India 39 4 Open Banking APIs worldwide Table of contents Open Banking APIs worldwide What is Open Banking? 5 Open Banking as a consequence New customer of new value chains needs Given these considerations, ndgit defines Many of the changes delivered through digi- vices and transactional products. This leads open banking as a value-adding business tisation are driven by shifts in user behaviour. to increasing pressure for banks to innovate model that uses Open APIs to generate new Today, customers can easily search and com- and forces them to rethink new digital offer- revenue streams. pare the most attractive and cost-effective ings. products on the market, without having to Open API’s are different from regulated PSD2 rely on their incumbent provider. Major tech- A prime example of this can be found in Chi- APIs, as banks can decide for themselves to nology groups such as Amazon and Google na, where non-banking technology groups what extent they open up their bank data are not only transforming the delivery of ser- such as Alibaba and WeChat have very suc- and processes. They form the essential basis vices industry-wide, they are using holistic cessfully created digital ecosystems that fo- for implementing future networked business processes to significantly alter customer- ex cus on linking customer-centred services models of banks with the wider ecosystem. pectation - it‘s not just about shopping any- and products. The gradual integration of pay- more. ment and finance capabilities, now provides Innovators are already offering their custom- customers with a holistic digital customer ers new customer-centred services based on In the meantime, customer-centred finan- experience, which delivers more innovative Open APIs, thereby promoting innovation cial products are being pushed out to the versions of services that were previously re- and competition in the marketplace. As indi- market by FinTech’s. These can be used- in served for banks. In this way, new entrants cated above, the key drivers of open banking dependently of the user’s bank giving them continuously supplement and substitute tra- are new customer needs, the development Customer access to a multitude of innovative apps, -ser ditional banking products. of new technologies, competitive pressure and regulatory requirements and standards. Digital Partner Below we describe the individual drivers in Distribution more detail: Digital Partner Digital Partner Distribution Distribution New technologies The networking of value chains, and the Bank easy set-up, scalability, configuration and emergence of new platforms which are analysis of the links. Unlike other industries, aligned to holistic customer processes, have banks are still in the construction phase of made IT-side networking a priority for all- sec this type of system. The industry-specific -re tors with API platforms and microservices quirements for safety and functionality, es- now a paradigm for the systemic connection pecially with the introduction of the PSD2, Digital Partner of various partners. pose major challenges. Services Digital Partner Services Instead of complex interfaces, easy-to-un- So far, there are only a few suppliers in the derstand and technically designed REST market, which can provide both the required Bank APIs provide easy access for a variety of part- technical and banking expertise as a whole. Products Digital Partner Services ners while API management systems ensure Open APIs place high demands on IT secu- 6 Open Banking APIs worldwide Open Banking as a consequence Open Banking APIs worldwide New customer needs 7 rity. Regulations and standards for the implementation of open banking require a wide range of complex security functions from the banking systems. While these are partly fixed, banks are Regulatory able to select some within a certain framework and are responsible for the appropriate security concept. To this end, countries such as Switzerland and Nigeria have pushed ahead with the specifications introduction of security standards for the exchange of sensitive data to simplify the implementa- tion and use of new security technologies. and standards Internationally, Open Banking APIs are now being created on all continents. They are ei- ther initiated by regulatory bodies, e.g. PSD2, or by market-driven standards. The aim of the regulators is twofold - to open up pay- ments to non-banks and facilitate alternative business models; and to promote consumer protection and increase pressure on suppli- nical understanding and technical prerequi- ers to create fairer price structures.