APIs — Shaping the future of banking

Ryan Cuthbertson, Head, Product Management, Securities Services

Nitin Bhandari, Managing Director & Global Head of APIs, Platforms and Partnership Access

The growing use of application programming interfaces (APIs) is challenging how businesses communicate and how client solutions are developed and delivered. APIs are also enabling new solutions that address demands for personalised services and immediate fulfilment driving industry innovation, disruption and connectivity. Moreover, the use of APIs to disseminate data presents exciting opportunities for greater financial inclusion.

APIs are fast becoming the standard by which companies and systems exchange data, enhance customer experience, and deliver value-added services. No longer is digital communication between banks and their clients limited to scheduled, point-to-point connections. Instead, banks can connect their processes, services, content and data directly into clients’ business systems. Clients can then consume products and services in new ways, imbedding these services into their own ecosystems. And API application is not limited to client solutions; it’s enabling banks like Standard Chartered to drive financial inclusion and sustainability.

Creating partnerships, connecting ecosystems

APIs are not new. What has changed is how they are being adopted to facilitate open banking. Today, banks, their clients and their partners can share data and integrate ecosystems securely – and often in real time. In the corporate-to-bank space, the use of APIs is becoming mainstream. This is in part due to well-publicised success cases – such as in the insurance industry (for new policies, renewals and claims handling) and to facilitate ride sharing, food delivery and other new consumer models. However, solutions are now emerging across industries — from the immediate release of a car at a showroom through to subscription models for consumer products. Ultimately, companies are seeking to create integrated, frictionless client-centric experiences.

To date, APIs have mainly been used to enrich corporate-to-bank integration. However, there is now an opportunity to improve banks’ engagement with their financial-institution clients. Today, much of this interaction takes place via SWIFT, which prescribes how often (and what type of) data can be exchanged. However, as transactions increasingly take place in real time, the limitations of this approach become more apparent. In Hong Kong, for example, there are six daily settlement cycles which use traditional industry standards, yet some data sets are only available at end of day, creating an information lag. In contrast, using APIs allows more regular, dynamic data exchange, including the updating of client systems directly with transaction statuses. The use of APIs for interbank connectivity remains relatively limited, although this is likely to change – for example for securities settlement – as use cases become more widely disseminated.

A financial-inclusion driver

Standard Chartered is playing a leading role – delivering on its open banking promise across its footprint. Its pioneering internal and external engagement, aXess platforms, is one example. By June 2019, the Bank had created more than 100 APIs and published a comprehensive standards catalogue aligned with international API standards. Standard Chartered is also building on its API investments to further its sustainable banking and financial inclusion goals.

In 2018, the Bank launched its first digital-only offering in Cote d’Ivoire, a country with a financial inclusion rate of just 40 per cent as of 20171 Based on its success, the digital banking service has now been extended to Uganda, Tanzania, Ghana and Kenya. The second phase of the new digital bank onboards clients in under 15 minutes – and it uses API technologies to provide services such as quick response (QR) code and peer-to-peer (P2P) payments, loan and overdraft facilities, and instant fixed deposits.2

In another example, the Bank is partnering with Ant Financial to offer a new digital cross-border wallet remittance service. Via mobile payment platforms AlipayHK in Hong Kong and GCash in the Philippines, the service offers the 180,000 Filipino workers in Hong Kong the ability to remit money home to their families in real time, securely and at a low cost3.

As the importance of a differentiated customer experience and instant fulfilment grows (and a need for this at scale), open APIs will be instrumental in shaping the financial services industry of the future. This will be dependent on new technologies, but also on the appropriate use of partnerships – such as that between Standard Chartered and Ant Financial, or the development of API standards through collaborations like the ASEAN Financial Innovation Network (AFIN)4 in Asia. Banks that harness these technologies to connect ecosystems, support clients’ consumer strategies and use their expertise will lead the way in driving social and environmental transformation.


1 Financial Inclusion Insights, by InterMedia, Cote d'Ivoire 2017 survey, Overview section on website, paragraph 2 http://finclusion.org/country/africa/cote-divoire.html

2 Standard Chartered, Press release, Launch of second wave of digital-only retail banks across four African markets, Jan 19, paragraph 2 https://www.sc.com/en/media/press-release/weve-launched-the-second-wave-of-digital-only-retail-banks-across-four-african-markets/

3 Standard Chartered, Press release, Appointed by Ant Financial as core partner bank, June 2018, paragraphs 1, 4 https://www.sc.com/en/media/press-release/we-have-been-appointed-by-ant-financial-as-core-partner-bank-for-its-new-blockchain-cross-border-remittance-service/

4 International Finance Corporation (World Bank Group), ASEAN Financial Innovation Network to support financial services innovation and inclusion within ASEAN region, Nov 2017, end of paragraph 2

https://ifcextapps.ifc.org/ifcext/pressroom/IFCPressRoom.nsf/0/884ACC71B734AB18852581DA002D7FED

This article was also published by Euromoney

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