The competitive advantage of Open Banking
During the FinTech Festival in November 2016, Ravi Menon, managing director of the Monetary Authority of Singapore, highlighted an open API (applications programming interface) architecture as one of five infrastructure initiatives his organization was tasked with realizing.
At the time it was no longer something new as APIs have become a proven approach for some of the most successful businesses of recent years to grow exponentially. Think Facebook, Google Code, Amazon Web Services, Salesforce, Instagram and eBay to name a few. Perhaps taking the marketplace idea off the Google Play or Apple App Store playbook, the success of Tencent’s WeChat, starting as a micro-messenger and growing to become a marketplace to do commerce or perform even bank, has sown the idea of what opening an organization’s business to the community can do.
Across Asia-Pacific, it can be argued that the Monetary Authority of Singapore may have seen the API light with the release of a paper titled “ABS-MAS Financial World: Finance-As-A-Service API Playbook” which it co-authored with the Association of Banks in Singapore.
The playbook is arguably an effort to secure Singapore’s position as a leading financial center in the fast accelerating digital banking future – a future where successful banks are those who embrace openness to take on innovation, openness to take on third party business relationships.
In this exclusive interview with Fintech Innovation Michael Araneta, associate vice president, IDC Financial Insights, shares what he believes are key attributes of open banking and how financial institutions can tap on the concept.
He says the biggest challenge to open banking is not a technology – it is a people issue. He also talks about the interconnection between open banking with data monetization and digital transformation. He believes that in the future banking services will be just one of many services offered by an ecosystem of like-minded enterprises.