The standardized and secure exchange of data between a bank and third-party providers is hype, says Richard Hess of the Bankers Association. The crucial thing now is to recognize the strategic dimension of open banking for the financial center in good time.
Open Banking, which is first and foremost the ambition to make financial services even easier, faster and more reliable for customers. The vision behind the concept is to make data available in an ecosystem of different players – banks, insurance companies, FinTech companies and financial service providers.v.m. – exchange information with each other. This should make it possible, for example, to execute payments in real time and post them to the account, aggregate the assets spread across several bank accounts in any e-banking dashboard, or even compare and conclude the mortgage with the best conditions for the home directly on the real estate platform. Business customers such as SMEs can, in turn, improve their liquidity planning by integrating accounting software, for example. The focus is always on the customer and their data, which they can access at any time.
"The Swiss financial center is right in the middle of the creative turmoil – between hype and productive applications around "Open Banking", Says Richard Hess, head of digitalization at the Swiss Bankers Association (SBA). What is needed now is an overview. To this end, the SBA, together with a working group of bank representatives, has drawn up an overview. This is intended to provide more clarity on current developments and challenges with regard to the implementation of Open Banking in Switzerland,
Switzerland takes a market-based approach
The advantages of open banking are obvious, everyone agrees. The question, however, is not so much "what" rather than the "how, according to Hess. And this is where opinions would diverge. The hype surrounding open banking is not least due to the regulatory requirements for data exchange in the EU and other financial centers – e.g., in Switzerland.B. Brazil, Singapore, and Hong Kong – have been fueled. But there is another way, as Switzerland shows.
As the head of digitalization at the SBA goes on to explain, Switzerland is taking a more liberal approach in this area. Currently, there are no specific regulatory requirements in this country that would require banks to share bank data. In principle, therefore, banks are free to determine with whom they wish to cooperate and provide access to their interfaces accordingly – with the customers' consent, of course. This ensures that the collaboration between the bank and third-party providers is based on market considerations and concrete use cases, Hess said.
The previous approach has proven successful. The first platforms and marketplaces developing innovative solutions based on openly standardized or proprietary APIs (Application Programming Interface) are implemented. An example of this is the b.Link Platform of SIX. At the same time, individual banks are also working to develop standardized APIs for specific business lines.
Several initiatives are working on uniform standards
As the number of different offerings continues to grow, calls for a single API standard for the Swiss financial center continue to surface. "This is also to be welcomed. Because fundamentally, heterogeneity leads to complexity and higher costs", according to Hess. Accordingly, initiatives such as Common-API from SFTI and openbankingproject are working.ch to define and enforce uniform and open standards in areas such as payments, credit and pensions. Hess says the interests here are clear: "Third-party providers want as uniform and open standards as possible, so that they can dock with the same plug at as many banks as possible. And this without adapters. The banks, in turn, would like to optimize the effort involved in adapting their existing systems with their own interfaces."
Whether the vision of Open Banking could be realized to the desired extent would remain to be seen. Last but not least, customers would determine what happens in. "Regardless of the success or failure of today's initiatives and platforms, big tech companies from the U.S. and China will continue to shape customer expectations and serve unmet customer needs however readily. The Swiss financial center would therefore be well advised to address the strategic dimensions of Open Banking and ecosystems – before others do", SBA's head of digitalization said.