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Open banking marketplaces are the app stores for APIs

Open banking has transformed the sector and still offers organisations great untapped potential.

April 30, 2024

5 mins


Mark Willis Global Head of Open Banking Ecosystem, CIB

business women laptop with a world map in background

Open banking has been a transformative force over the past decade, even though it’s largely invisible to those who use it.

Paying with your mobile phone wallet, booking your summer holidays in home currency on a foreign-based travel site and receiving your tax rebate straight into your bank account after submitting a digital return. None of these services would be possible without open banking.

While the spotlight has mainly been on consumer use cases, business applications also hold great potential, from managing complex supply chains to real-time liquidity management and financing enterprises in emerging economies.

To boost the adoption of open banking in business, the industry needs to hone in on improving the customer experience, simplifying the implementation journey and harmonising the regulatory environment.

Open banking opens doors for business

Open banking is a financial services model that enables third-party platforms and developers to access a customer’s financial data through application programming interfaces (APIs).

While traditional banking services have largely operated in a closed model, open banking decentralises financial services. APIs open banks’ customer data up to fintechs and other service providers—both domestically and internationally—to create new apps and services with banking at their heart.

While the use of open APIs in corporate banking is still underdeveloped, there are plenty of opportunities, particularly around treasury. For instance, credit and debit notifications in real time via APIs enable companies to reconcile accounts rapidly rather than in periodic batch intervals. By extension, real-time data access also benefits forecasting and managing liquidity.

Shifting the focus from technology to user experience

As often happens with technology innovations, the narrative tends to be technically focused, which can hinder progress, especially in the corporate world.

Corporate banking applications can’t just be downloaded from an app store. They often require specialised partners to implement ERP (enterprise resource planning) systems and associated straight-through processes.

Driving the adoption of open banking requires a shift towards the user experience, making it easier to tap into applications through plug-and-play partnerships.

When integration is required from clients directly or through partners, the solution is open banking or API marketplaces as they deliver a much richer experience and usability than traditional API portals.

The experience these API ecosystems offer is increasingly becoming a crucial decision-making factor for corporate customers selecting a banking partner. That’s because it directly impacts customer service quality and can make interworking with the bank much easier.

Creating an open banking marketplace

When creating our own Open Banking Marketplace, we carried out extensive research with clients and partners to define what an optimal user experience would look like to them.

We developed digital solutions to address their most common requirements across various industry sectors. These include building blocks or APIs for payment and account information, FX, trade finance and securities services.

Our marketplace also allows users to explore, rapidly prototype and experiment before making a selection.

Working with key partners and platforms enables the pre-integration of our solutions into the customer’s platform of choice, cutting implementation time from weeks to days.

By leveraging these factors, the marketplace provides business customers with a single point of interaction for the bank’s products and services while offering a single connectivity model and implementation journey for all APIs. In the future, we will incorporate third-party APIs where relevant and where they add value for our clients.

Regulatory oversight and standardisation are vital

In addition to making open banking more accessible for corporate users, regulation and standardisation will be crucial to driving adoption.

The evolution of open banking differs around the world. In several countries in Asia and the US, it has been largely market-led. Conversely, in the EU and the UK, governments have paved the way with stricter standards and regulations, which have acted as a catalyst for open banking globally.

However, applying different governance strategies leads to fragmented standards, potentially hampering cross-border usage. This underscores the importance of efforts such as the International Chamber of Commerce and SWIFT’s global trade finance API standards for bank guarantees and letters of credit. Other vital harmonising developments will come from data privacy and security regulation.

To see open banking thrive across borders and reach scale, more needs to be done by both the private sector and regulators to create standardised frameworks that apply across regions or even on a global scale.

Progressing towards an “Open-X” ecosystem

The long-term vision is to create a comprehensive and safe cross-industry data-sharing ecosystem where embedded finance enables an almost limitless range of integrated services. “Open X” or “Open Everything”, as it’s variably referred to, will go beyond banks, fintechs and retailers into sectors such as manufacturing, utilities, healthcare and many others.

In addition to packaging financial and non-financial services together—for example, an e-merchant offering insurance—Open X could even extend to Compliance-as-a-Service, leveraging banks’ KYC (‘Know Your Customer’) engines for due diligence.

An ecosystem with this level of integration could also give a major boost to financial inclusion, opening up finance to people and businesses that have not previously been able to access it.

An excellent API experience along with supportive regulation and common standards will be vital to building the momentum needed to see these opportunities abound.

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