This paper “The API Economy and Digital Transformation in Financial Services: The Case of Open Banking” written by Dr. Markos Zachariadis and Dr. Pinar Ozcan from Warwick Business School, University of Warwick is on open banking, looking at the possible impact of the adoption of public application programming interfaces (APIs) on the financial services industry. The promise in application of open APIs is to create efficiencies and improvements for end-customers, as well as harnessing the capability and creativity that third parties can contribute to the realm of financial services. This research aims to provide an insightful resource for financial institutions, fintech startups, technology companies, and regulators alike.
According to the research, the EU’s revised Payment Services Directive (PSD2) is anticipated to further open up the European payments market and encourage competition, particularly in the areas of payments. Likewise the UK Government, keen to create an initiative of data sharing and open data in banking, requested the creation of the Open Banking Working Group (OBWG) in 2015. The aim of the working group – a collective of banking, open data and FinTech professionals – is to develop a framework for adopting an open API standard across banking and explore how open banking will impact consumers, regulators and industry. The objective of this SWIFT Institute working paper is to help develop the thinking around some of the key challenges and opportunities surrounding the use of open APIs. The research firstly explores relevant theories that are behind the creation of new organisational structures and business models in the digital age in order to help anticipate the impact of adopting open APIs. Secondly, the paper presents findings around the key challenges and opportunities that open APIs pose for the banking sector in the UK and the EU following the introduction of OBWG and PSD2 regulatory frameworks.
It is available for download at www.swiftinstitute.org/papers/