International Developments: The Open Bank Project
APCA’s recent submission to the Productivity Commission Inquiry into Data Availability and Use covered the vibrant marketplace current data sharing arrangements have created and the strong platform these provide for a future where data sharing continues. Our submission also looked at some of the lessons that can be learnt from markets where regulation is guiding data sharing arrangements.
As part of our work to monitor and interpret international developments, last week APCA was visited by Ismail Chaib, COO TESOBE / Open Bank Project, to gain his insights into how the Open Banking Project works and why it believes in standardised access to open APIs.
The Open Bank Project (OBP) is a member-funded open source API provider from Germany which was founded in 2013. It provides a technology solution for banks wishing to share their data: an API layer on top of existing core systems to allow easier internal and external access to core banking functions.
What’s driving the desire for banks to adopt the OBP?
There are five basic divers behind this:
- Consumers are asking for tighter integration – people are used to apps like Uber or AirBnB and expect this level of integrated service in their banking too.
- There’s a FinTech revolution happening around the world. These start-ups are starting to chew at older FI’s customer base driving the need for innovation and collaboration.
- There’s an interesting study which proved that 20% of respondents said they would use Facebook, Google or Amazon to buy banking or insurance services if available. So there’s obviously a willingness for consumers to jump ship from traditional financial institutes (FI). The industry has to respond to this by improving their consumer outputs, which is what we do.
- Integrating the OBP is significantly less risky and expensive than completely replacing the legacy core banking systems yet it provides banks with a level of agility the legacy systems lack
- Many governments around the world have been looking at regulating open banking – similar to PSDII in the EU as a way to drive innovation and competition. FIs are looking to get ahead of regulation.
How does the Open Bank Project’s app store work?
A bank app store is a discovery channel listing apps which provide additional features beyond a bank’s standard offerings. Customers can easily finds apps which address their particular needs and work with their bank accounts.
We source quality apps in a number of different ways: OBP accredits some apps directly, banks can suggest an app for accreditation, and we run competitions to produce apps for a particular functionality if none exist.
What are your thoughts on the benefits of standardisation?
The ability to have an app store full of apps that have already been vetted for usability and safety is hugely beneficial. We provide a global community of knowledge and expertise to draw on so apps can come from anywhere and they’d all work interchangeably – thanks to standardisation.
This allows a degree of talent acquisition – if a developer already understands how the APIs work, it’s much easier to get up to speed to create even more innovation and improve the customer experience.
What are the implications of PSDII on the OBP?
We currently have APIs that meet the known PSDII requirements. We have more than 100 APIs available to customers and around 10% of these cover the full suite of regulation present in PSDII. We’d expect our customers to monetise access to the remaining 90% of the APIs.
How does the OBP protect customers today?
We have several security measures in place already. For example, the customers of the banks who use us never provide us a username or password – they sign in through ‘oAuth’, which is similar to ‘Sign in with Facebook’ or ‘Sign in with Google’. And a two factor authentication process, SMS confirmations for example, is triggered when a transaction is attempted over €100.
For more information check out www.openbankproject.com
