Assignment - Open Banking in Fintech

Fintech 101
#41
  • Find out what the regulators in your region are doing within Open Banking. Are they doing something? If so, try to figure out how far have they come and what will or is included in the regulation. Share your findings in the Forum.
    Apparently in SE Asia, Singapore is paving the way by leading with more advance steps. My country Thailand is also taking steps with the authority looking to come out with Personal Data Protection Act and the Bank of Thailand encouraging “he industry to standardise around a QR code payment scheme, a similar approach – starting in a regulatory sandbox- might be adopted for Open Banking if the scheme proves successful”. (from https://fintechnews.my/17123/banking/open-banking-asia-asean/)

This next article is a good summary of various stages of different country which explains the different driving force for OPEN BANKING in Asia. In Europe it is payment directive initiation while each country in Asia has different driving force.
https://www.finextra.com/blogposting/17396/the-asia-pacific-way-of-open-banking-regulation

It seems this is an exciting opportunity for growth for Open Banking any innovative minds in this region. I will need to further explore after completing this task.

  • Take a look at a couple of banks active in your region and what kind of developer portals and help they are offering. Can you use any of this for your fintech ideas? Is the service for free or how much will it cost? Share your findings in the forum.
    From my initial research I found that only about three commercial banks – Bangkok Bank, Kasikorn Bank and Siam Commercial Bank in Thailand have “some” APIs for open banking. (https://www.openbankingdirectory.io/compare/Thailand). The fourth bank Bank of Ayudhya just announced on Feb 23, 2021 of the news launching API by IBM for open banking development (https://www.tech2thai.com/enterprise_tech/694)

  • Research some Fintech API Aggregators in your area and share them in the forum.
    I did find some names like 2c2P, Codapay, ipay88, ThaiEPay, SiamPay, but they are pretty much in payment side. I need to find out more.

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#42

  • Find out what the regulators in your region are doing within Open Banking. Are they doing something? If so, try to figure out how far have they come and what will or is included in the regulation. Share your findings in the Forum.
    USA seems to have a hodge podge of regulators and jurisdictions from which they can conduct Open Banking. From what I have read it seems that large banks within the US are particularly risk adverse to criticism by the public and they are hesitant to engage in any controversy with respect to Ownership and transmission of personal data. Also the US has both Federally and State Chartered institutions that further complicate matters as different states have varying degree of consumer protections. However I am hopeful that the various regulatory bodies such as CFPB, OCC, State Bank Regulators etc will start adopting open banking more aggressively as they may fall behind in inovations currently happenning in other countries.

  • Take a look at a couple of banks active in your region and what kind of developer portals and help they are offering. Can you use any of this for your fintech ideas? Is the service for free or how much will it cost? Share your findings in the forum.

I focused on a local southern bank known as Regions to see what they were doing with respect to open banking. It seems that they are trying to use the open banking concept to enhance deliverables to existing customers by creating a 360 degree view of their financial situation. That is to say they will focus on aspects of customer data such as use tools like cash flow management, budgeting, debt reduction and net worth tracking across their entire financial footprint.

  • Research some Fintech API Aggregators in your area and share them in the forum.
    List of aggregators i found online in the US include MX, Finicity, Intuit, Plaid, CashEdge, Envestnet Yodlee.
    [/quote]
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#43
  • Find out what the regulators in your region are doing within Open Banking. Are they doing something? If so, try to figure out how far have they come and what will or is included in the regulation. Share your findings in the Forum.

In the US, many regulatory regimes have taken a softer approach on open banking regulations, primarily because the bank regulatory system is complex and siloed/fragmented. As a result, regulators–such as the Consumer Financial Protection Bureau (CFPB) which released a set of “non-binding guidelines for the access and use of consumer data”–have opted to let the financial institution and FinTech companies–the industry stakeholders–drive innovation for open banking and expand digital services for their customers. The U.S. regulators primarily concern themselves with consumer protection, and in particular with consumer data which is where regulators are likely to take on a more “hands-on” approach in the near future, as data-aggregators are more closely examined. As of now, several industry groups have created frameworks for the creation of common standards for open banking. the API Standardization Industry Group (ASIG), created by the Electronic Payments Association, has “identified 16 specific APIs for development based on their overall impact to the payments industry.” These 16 APIs can be broken into three catageries: a) fraud and risk reduction; b) data sharing, and; c) payment access. Use-cases for two categories, Fraud and Risk Reduction and Payment Access, are slated for Initial Development. Hence, at the moment, there are few regulations in the US open banking space, and it is the responsibility of FIs, FinTechs, and TPPs to drive innovation in the open banking space with customer data protection being at the foundation of their services; at least according to the regulators. All that being said, the US open banking space is market-driven, and the financial service industry has focused on creating frameworks that slate “fraud and risk reduction” and “payment access” for initial development. Due to the limited regulatory frameworks and the complexity of legacy bank infrastructure, the financial service industry in the US has focused more on delivery speed and efficiency for business capabilities, objects and models, and environments in order to compete in the open banking space, whereas regulatory-driven innovation (as in EU’s case) has lead to standardized interoperable APIs that enable better developer experience and API management.

  • Take a look at a couple of banks active in your region and what kind of developer portals and help they are offering. Can you use any of this for your fintech ideas? Is the service for free or how much will it cost? Share your findings in the forum.

I was able to find open banking services offered by chase, which allow their clients to connect to J.P Morgan Built-In APIs which allow for real-time view of treasury data, intelligent automation of services, increased transparency, improved controls, consolidated information, customized reporting, and a better customer experience. You can sign up to build and securely integrate digital solutions with Chase APIs which gives you access to Chase’s network of customers and business clients–which is a large network. In my hypothetical FinTech, using Chase’s APIs makes it easier to onboard Chase’s customers for payment services and enhanced user experience, and get tools for managing APIs for optimizing our architecture.

  • Research some Fintech API Aggregators in your area and share them in the forum.

Envestnet/Yodlee offers data aggregation, focusing on investment data.
Plaid is another popular Fintech API Aggregator that helps other fintechs aggregate data.
CashEdge offers account-to-account transfer, account opening and funding, data aggregation, small business payments and personal payment service.
MX aggregates data for their clients using multiple account aggregators, which gives them the ability to switch connections if their is a failure point somewhere in the network. MX make it easy for FIs and FinTechs to access transaction, investments, account verification, id verification, assets, etc.
Finicity is another data aggregator that helps with credit decisions offering a new scoring methodology they created called UltraFico

Sources:
PWCS Financial Crimes Unit: https://www.pwc.com/us/en/financial-services/financial-crimes/publications/assets/pwc-open-banking.pdf
Developments in Open Banking and APIs: Where Does the U.S. Stand?:
An Open Road For Open Banking: https://www.pymnts.com/news/digital-banking/2020/open-road-for-open-banking/
JP Morgan Open Banking and API service:
https://www.jpmorgan.com/solutions/treasury-payments/insights/open-banking
https://jpmcsso.jpmorgan.com/sso/action/federateLogin?domainName=chase.comjpmchase.comjpmorganchase.com&URI=https%3A%2F%2Fdeveloper.chase.com%2F&msg=+&securityLevel=0&app=-1&ref=1055759&cs=t5xzytrI3uR9kxZ1UCXLM62C7Nw%3D
What is Financial Data Aggregation (and players in the space):
https://www.mx.com/moneysummit/a-list-of-financial-data-aggregators-in-the-united-states/

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#44
  1. The UK has the Competition and Markets Authority
    (CMA) mandating the UK’s largest banks to adopt the
    Open Banking Standard.

Under PSD2, institutions wishing to act as Payment Initiation
Service Providers (PISPs) or Account Information Service Providers
(AISPs) must be authorized payment service providers (PSPs).

Incumbent banks can choose
from four non-mutually exclusive operating models:
• full-service provider: continue with a full-service offering,
delivering proprietary products via a proprietary distribution
network with little or no integration with third parties via APIs
• utility: relinquish ownership of products and distribution to
operate as a utility, providing other players with infrastructure
and non-customer-facing services
• supplier: continue to offer proprietary products but relinquish
distribution to third-party interfaces
• interface: concentrate on distribution by creating a marketplace
interface through which third parties can provide products
and services.
2. HSBC - Allows you to build and extend your products and services with their intuitive and secure access interfaces. You can use their API Sandbox to develop your application and benefit from HSBC’s international network to create customer propositions or revenue opportunities. https://developer.hsbc.com/#/welcome
3.Bud allows you to combine customer account data from Open Banking with your own data and data aggregated through third-parties to power innovative financial services.
https://www.thisisbud.com/

#45
  1. Find out what the regulators in your region are doing within Open Banking. Are they doing something? If so, try to figure out how far have they come and what will or is included in the regulation. Share your findings in the Forum.

In Europe/Germany PSD2 - the Payment Service Directive (PSD2) is a directive for the implementation of open banking. Financial institutions and payment providers are required to create access or interfaces for third parties via APIs and thus account access so that they can participate in the banks’ payment transactions. This account access may only take place upon the express request and consent of the respective account holder.
Responsible regulator in Germany is BaFin.

  1. Take a look at a couple of banks active in your region and what kind of developer portals and help they are offering. Can you use any of this for your fintech ideas?
    Is the service for free or how much will it cost? Share your findings in the forum.

Comdirect – Account and Transaction, Payment Initiation, Funds Confirmation Service
Commerzbank – Account information, Payment Initiation Service, Funds Confirmation Service, Authorisation
Ing. Diba - Account information, Payment Initiation Service, Payment Request, Virtual Ledger Account API, Showcase API
Sparkasse – Accounts and payment API,

  1. Research some Fintech API Aggregators in your area and share them in the forum.
    I could not find a dedicated API aggreator in Germany. The ones listed under https://www.openbankingtracker.com/country/germany are:
    • Klarna (Sweden)
    • BankingSDK (Belgium)
    • Ibanity (Belgium)
    • Salt Edge (Spain)
    • EquansWorldline (France)
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#46

Mexico has started to open up its financial system hoping to strengthen open banking in Latin America. Even before the Fintech Law was implemented, BBVA was offering API services and has been key to the regulations.
BBVA in Mexico offers API’s for Accounts, auto loans, and Locations.
Belvo is one of the few Aggregators used in Mexico.

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#47

United Kingdom Region

1- FCA announced changes to the regulation - These changes will permit UK-based third-party providers (TPPs) to use an alternative to eIDAS certificates to access customer account information from account providers, or initiate payments, after Brexit. Firms must act to ensure they can continue to provide open banking services.

2- Two banks already providing API services are

HSBC - https://developer.hsbc.com/#/welcome

Santander - https://developer.santander.co.uk/sanuk/external/product-list

3- Plaid - https://plaid.com/uk/

Plaid’s integrations are Open Banking and PSD2 compliant, delivering secure and reliable access to the UK and European financial ecosystems.

Plaid is a leading provider in the UK, Europe and North America, connecting 3,000+ apps to 11,000+ financial institutions, all through a single API.

Plaid builds with developers in mind. Get set up in the Dashboard instantly, and with just a few lines of code, you can implement Plaid in an afternoon.

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#48

  1. In Germany as part of the EU the PSD2 is enforced and controlled by the german BaFin. PSD2 requires banks as mentioned in lectures to provide access to payment and account information (PISP, AISP)

  2. Well established banks offer not much more than the required minimum. Commerzbank and Comdirect also offer APIs for Fund Confirmation Services.

  3. finAPI - focusses mainly on credit scoring APIs
    BanksAPI - focusses also on insurance APIs and Robo Advisor APIs

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#49

  1. My region: Brazil.
    Brazil seems to have one of the most advanced open banking strategies being implemented at the moment.
    In Fev 2020 the Brazilian central bank launched Pix system (instant payment system) which is claim to be the first step towards digitization of Brazilian financial system. It’s resembles the Pan European Payment System Initiative. Every Brazilian citizen and company can now create an unique “key” or “token” (that can be their telephone number, personal ID, QR code, or company registration number) and receive real time payments through that number, no matter the bank, 24/7.

  2. Bank of Brazil has a free developer portal. Tried to create a log-in but there seems to be a bug preventing me to proceed.
    As for Bank Itau, it seems you have to fill a form to request a login, and from use their API’s (for free as well).
    It appears that they have open API’s on passive funds, checking accounts, credit cards, pix, real estate credits, investment portfolios, among others.

  3. Meio (connect with Brazilian credit fintechs). Only one found.

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#50

I think Iceland not very Developer in opening banking. They offer services because they have to.
In Iceland you can contact one of the three banks, for example www.islandsbanki.is and you get information about open API or open web service. They follow PSD2 regulation. The Landesbankinn is offering a developer service : https://developers.landsbankinn.is/ The offer API products for payment, funds, ATMs, Currencies and fees.

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#51

• PSD2 facilitates an Open Banking business environment in which:

  • Third Parties Providers -TPPs - may access to bank account data in order to offer Payment Initiation Services (PIS) and Account Information Services (AIS)

  • Banks are required to set up dedicated interfaces to communicate with TPPs

PSD2 obliges banks to set up dedicated interfaces with TPPs allowing fast and secure interactions among software applications

• The three biggest Italian banks seem to be ready for providing API service, and their developer portals are here:
1. Banca Intesa - https://openbanking.intesasanpaolo.com/#/
2. Unicredit - https://developer.unicredit.eu/
3. Monte Paschi MPS - https://www.mps.it/PSD2/open-banking.html

• Fabrick, CBI Globe

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#52

Hello,

  1. I am from Latvia and as it is country in Europe and also a member of European Union, PSD2 is in place here. Everything PSD2 says, will also be applicable for us in Latvia.

  2. I found that biggest banks as Swedbank and Luminor is inviting people to collaborate. Swedbank invites people with FinTech knowledge to build their soutions for their offered problems and then to propose the solutions to them.

Their offer: "Let’s innovate together
We believe in co-creation and innovation that enables people, businesses and society to grow. Build innovative services that solve problems for millions of customers with the leading bank and financial platform.

By partnering with Swedbank through Open Banking you can gain access with not only to Swedbank customers in four markets, but over 58 Savings Banks (Sparbankerna) in the Swedbank family."

  1. In Latvia company TietoEvry has launched API aggregator. It is the same company Gustaf was talking about. As we Baltics are kind of wannabe Nordics, sooner or later we have everything what Nordics implement, so nothing very interesting for my research :smiley:
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#53

  • In South Africa regulators are likely to soon expedite a regulatory framework for open banking taking cue from the practice in Europe and Australia. On 1 July 2020 Australia launched its Consumer Data Right (CDR) for data sharing. The CDR is a mechanism for consumers to share data held by trusted third parties securely with their consent. On 1 July 2020 South Africa promulgated the Protection of Personal Information (POPI) Act for which businesses including financial institutions were given a year to institute measures for compliance. The POPI Act has implications on the operations of financial institutions with regards to protection of consumer data as it provides guidelines on disclosure and processing of personal information. Incidentally, through interconnectedness with Europe, South African financial institutions would be required to comply with GDPR as well as the domestic POPI Act. Since GDPR standards are more onerous, the POPI Act may need to be amended to align with GDPR standards.
    Going forward, open finance is the next frontier. The open banking ecosystem is limited to sharing payments accounts data. Open finance is a framework that covers all financial data including insurance, wealth management, pensions and investments, and not just payments accounts. Some jurisdictions, for instance, the UK regulators, have since recognised the need for an open finance framework and are exploring its feasibility. In an open finance ecosystem, competitive rivalry will be replaced by co-opetition, that is, cooperative competition between banks, telcos, fintechs, Big Techs and other TPPs whose shared goal will be to give the best value for money to the consumer.

  • In South Africa open banking is viewed as one policy tool that could spur competition in the banking sector in which only five banks -ABSA, Capitec, First National Bank, Nedbank and Standard Bank – have a combined market share of over 90%. Notably, two South African banks – Nedbank and Investec – announced in 2019 that they were embracing open banking. Nedbank is the first bank both in South Africa and Africa to open its API platform, API Marketplace, to fintechs that meet its technical standards for open banking. This is a boon for fintechs because they can innovate products that could be guaranteed to be used by Nedbank customers if their products are accepted into its API Marketplace. Similarly, Investec has entered the open banking by collaborating with Bud, a fintech that helps banks connect their apps and data to other fintech s and financial service providers. Amidst COVID-19 in 2020, a South African fintech, truID, received significant funding to develop open banking technology to assist financial service providers to access consumer banking data securely.

  • The only current API Aggregators I could find on https://www.openbankingtracker.com/country/south-africa were TrueLayer and Fintecture, which both are provided under Transferwise Bank. But hoping to see some more innovations from the local banks soon.

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#54

JAPAN

In 2017, a framework for regulating electronic payment service providers was established (PISPs and AISPs).
However, not many negotiations and agreement have not been made because FSA (Financial Services Agency) took a hands off approach, and let banks and companies do negotiations. Also, unlike in Europe, banks charge companies for their APIs.

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#55

  1. In my country Colombia right now Regulators are working on an open banking regulation expected to be ready in 2022
    https://iupana.com/2021/02/08/open-banking-in-colombia/?lang=en

  2. According to my answer for the last question there is not yet development in APIs in Colombia.
    example https://www.openbankingtracker.com/provider/bbva-co

  3. An API aggregator (In Latin America )
    https://www.openbankingtracker.com/api-aggregators/belvo

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#56
  1. Regulators in the US are mulling possible open banking regulations but it is extremely slow moving due to inefficient organization of regulators requiring many different bodies to sign off on regulation. The industry however is growing more open to it.
  2. Most APIs that I discovered charge a fee for use. Large embedded players are able to leverage large customer bases against developers looking to use the API through high fees or profit sharing.
  3. Sila was one of the interesting companies I came across. It uses an ERC-20 token to create verifiable banking and identity statements. The value of the silk token is a stable coin pegged to the US penny and the Evolve Bank and Trust which is an FDIC member holds backing for all silausd in circulation.
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#57

  1. Regulators for the US are pretty much extending already established banking rules over Fintech.
    Most of the technology makes tracking transactions easier for regulators.
    -Surveillance & monitoring
    -KYC & AML
    -Reporting & Risk Management
    -Regulatory intelligence
    -Investor Risk Assessment

  2. Bank of America offers Cashpro Software services, although nothing could be found about their fees. Not free to my understanding. Works with realtime transactions and is available 24/7(“Always On”). The security and API integration would work for my online market place of physical items.
    JPMorgan Chase’s “WePay” would be another option for my business.

  3. Plaid and Fincity are two data aggregators that can connect customers data/financial information to their apps for fast and easy services.

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#58

A question to the group.

I have learned that most banks now have developer portals with the APIs for Fintechs to build services. But if I integrate my service with Bank 1, reaching their customers, what about Bank 2-50.000?
I understand that it is some implementation you can do to reach more than one bank, or it would be impossible to offer any valuable services.

Andreas

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#59

And the answer is: API- aggregators. :smiley:

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#60

• Find out what the regulators in your region are doing within Open Banking. Are they doing something? If so, try to figure out how far have they come and what will or is included in the regulation. Share your findings in the Forum.

  • June 2016, Malaysia’s central bank and principal financial services regulator, Bank Negara Malaysia (BNM), established a Financial Technology Enabler Group (FTEG) support innovations in the sector.
  • Mid 2017 BNM launched Fintech Regulatory Sandbox Framework to allow testing of applicable technology including Open Banking
  • BNM in 2017 started to focus on open APIs and their impact on the country’s financial, planned to start an Open API implementation group in 2018 which they did for the purpose of developing standards to an open data, security, access rights and oversee arrangements for TPPs (Third party providers) and to review existing regulations on controls over customer information
  • BNM also set up Interoperable Credit Transfer Framework (ICTF) which promotes collaborative competition for mobile payments
  • 2017 BNM granting e-money license to WeChatPay garnering partnership from many banks such as Hong Leong Bank, Maybank, Public Bank and CIMB as one way to monetise the Open Banking APIs
  • Several global, regional and Malaysia banks have granted developers access to their APIs via publicly availalable developer portals and sandboxes.
  • Maybank, OCBC, DBS have advertised applications and partnership
  • Malaysia has many siloed use cases and products but its future depend on how the banks, fintechs and regulators develop a common framework and infrastructure to support a cohesive ecosystem thus the establishment of ASEAN Financial Innovation Network (AFIN)
  • AFIN aims to accelerate fintech innovation, digital transformation and build Open Banking Ecosystem across the region

• Take a look at a couple of banks active in your region and what kind of developer portals and help they are offering. Can you use any of this for your fintech ideas? Is the service for free or how much will it cost? Share your findings in the forum.

As for the fees, I do not have the opportunity to test it - no idea how to test it. But studying this course definitely opening up a lot of potential and opportunity as open banking implementation seems so new in this region.

• Research some Fintech API Aggregators in your area and share them in the forum.

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