- Find out what the regulators in your region are doing within Open Banking. Are they doing something? If so, try to figure out how far have they come and what will or is included in the regulation. Share your findings in the Forum.
In the US, many regulatory regimes have taken a softer approach on open banking regulations, primarily because the bank regulatory system is complex and siloed/fragmented. As a result, regulators–such as the Consumer Financial Protection Bureau (CFPB) which released a set of “non-binding guidelines for the access and use of consumer data”–have opted to let the financial institution and FinTech companies–the industry stakeholders–drive innovation for open banking and expand digital services for their customers. The U.S. regulators primarily concern themselves with consumer protection, and in particular with consumer data which is where regulators are likely to take on a more “hands-on” approach in the near future, as data-aggregators are more closely examined. As of now, several industry groups have created frameworks for the creation of common standards for open banking. the API Standardization Industry Group (ASIG), created by the Electronic Payments Association, has “identified 16 specific APIs for development based on their overall impact to the payments industry.” These 16 APIs can be broken into three catageries: a) fraud and risk reduction; b) data sharing, and; c) payment access. Use-cases for two categories, Fraud and Risk Reduction and Payment Access, are slated for Initial Development. Hence, at the moment, there are few regulations in the US open banking space, and it is the responsibility of FIs, FinTechs, and TPPs to drive innovation in the open banking space with customer data protection being at the foundation of their services; at least according to the regulators. All that being said, the US open banking space is market-driven, and the financial service industry has focused on creating frameworks that slate “fraud and risk reduction” and “payment access” for initial development. Due to the limited regulatory frameworks and the complexity of legacy bank infrastructure, the financial service industry in the US has focused more on delivery speed and efficiency for business capabilities, objects and models, and environments in order to compete in the open banking space, whereas regulatory-driven innovation (as in EU’s case) has lead to standardized interoperable APIs that enable better developer experience and API management.
- Take a look at a couple of banks active in your region and what kind of developer portals and help they are offering. Can you use any of this for your fintech ideas? Is the service for free or how much will it cost? Share your findings in the forum.
I was able to find open banking services offered by chase, which allow their clients to connect to J.P Morgan Built-In APIs which allow for real-time view of treasury data, intelligent automation of services, increased transparency, improved controls, consolidated information, customized reporting, and a better customer experience. You can sign up to build and securely integrate digital solutions with Chase APIs which gives you access to Chase’s network of customers and business clients–which is a large network. In my hypothetical FinTech, using Chase’s APIs makes it easier to onboard Chase’s customers for payment services and enhanced user experience, and get tools for managing APIs for optimizing our architecture.
- Research some Fintech API Aggregators in your area and share them in the forum.
Envestnet/Yodlee offers data aggregation, focusing on investment data.
Plaid is another popular Fintech API Aggregator that helps other fintechs aggregate data.
CashEdge offers account-to-account transfer, account opening and funding, data aggregation, small business payments and personal payment service.
MX aggregates data for their clients using multiple account aggregators, which gives them the ability to switch connections if their is a failure point somewhere in the network. MX make it easy for FIs and FinTechs to access transaction, investments, account verification, id verification, assets, etc.
Finicity is another data aggregator that helps with credit decisions offering a new scoring methodology they created called UltraFico
PWCS Financial Crimes Unit: https://www.pwc.com/us/en/financial-services/financial-crimes/publications/assets/pwc-open-banking.pdf
Developments in Open Banking and APIs: Where Does the U.S. Stand?:
An Open Road For Open Banking: https://www.pymnts.com/news/digital-banking/2020/open-road-for-open-banking/
JP Morgan Open Banking and API service:
What is Financial Data Aggregation (and players in the space):