At the first members' event of 2022, we once again welcomed over 50 participants from our partners and members, including two new members: Intrum and Oper Credits. The event focused on the strategies and activities of the members in the context of Open Banking as well as their networking. Dr. Ortwin Scheja, the coordinator of the Berlin Group, gave an insight behind the scenes of Open Banking in the EU and how they will further promote Open Banking in the coming months.
Guest Contribution Berlin Group - Dr Ortwin Scheja (Coordinator)
From Berlin Group's perspective, Open Banking in the area of payments has developed very satisfactorily in recent months – since July 2020, the number of corresponding API calls in Europe has increased significantly. More than 75% of all banks and over 1’000 third-party providers (TPPs) have implemented the NextGen PSD2 API framework in a total of 27 countries. The harmonisation of Berlin Group's openFinance API Framework with the existing NextGen PSD2 API Framework allows companies to achieve reach, low implementation costs and investment protection. Request-to-Pay (RTP) functions, as the first published premium service of the openFinance framework, are perfectly suited for API use and only require connectivity and secure messaging to transmit payment data.
Deriving an RTP API from a PSD2 API by relocating the SCA
Source: Berlin Group (2022)
Berlin Group has defined the following roadmap for 2022:
1st semester 2022
2nd semester 2022
Dr. Ortwin Scheja is convinced that Open Banking will also gain momentum in the non-regulated areas such as wealth and financing, as the need for the corresponding services is increasing due to the advancing digitalisation and investment hurdles that have been reduced by the PSD2.
Partner University of Bern - Mario Blazanovic (Research Assistant, Lawyer)
Membership of the OpenBankingProject.ch enables the Faculty of Law at the University of Bern to conduct proactive research on the pulse of events relating to open banking and its impact on the Swiss financial centre. The financial industry and legal norms have undergone a major transformation in recent years. Open Banking is now bringing further momentum to numerous legal areas, these include Data protection, banking secrecy, money laundering and supervisory law (outsourcing). In Switzerland, the revised Data Protection Act and the revised Anti-Money Laundering Act, in particular, bring interesting new developments, which increase the momentum in the context of data portability and the transfer of KYC data. These developments also underline the potential of the OpenBaningProject.ch workshops on “Building a Trust Network” in the area of “Customer Onboarding & KYC”.
Member Andrion - Aniello Bove (Partner), Shan Nazim (Principal Consultant)
Andrion presented three international examples of Open Banking applications in which they supported neobanks in setting up their platform. In the approaches chosen by Mettle (UK), Alpian (CH) and BforBank (F), the "API-first" approach was crucial from the beginning. This enables simple integration of their own services (e.g. parent company) as well as third-party services and ensures greater negotiating power and flexibility in the long term. The overall focus today is on the rapid integration capability of software, especially TPP, which is made possible by modern development tools and platforms. Monolithic core banking systems are less in focus when building neobanks. Finally, the corporate culture always plays an important role and should harmonise with the "open banking mindset".
Member Thurgauer Kantonalbank - Horst Wurm (Head of IT)
The Thurgau Kantonalbank (TKB) is actively engaged in network economics and open banking and has launched two initial offerings with the mortgage brokerage platform "brokermarket" and the B2B2C marketplace "TG Inside". In both cases, TKB acts as platform operator and is planning various interface extensions depending on demand. In the case of "brokermarket", the transfer or adoption of identification and KYC data of end customers (and perhaps also property data at some point) can be an extremely exciting development step, with convincing added value for all market participants. With "TG Inside", the services would like to be expanded, especially in the areas of sport, culture, tourism, voluntary work, and agriculture. With the two platforms, TKB is expanding its business model from a classic capital provider to a platform operator/licensor and can thus tap into new sources of income.
Latest activities OpenBankingProject.ch (Simon Bleher, BEI)
The in-depth workshops "Building Trust Network", which are taking place from November 2021 to March 2022 as part of the workshop series "Customer Onboarding & KYC", got off to a very successful start and attracted a broad spectrum of companies to participate. Currently, the community consists of over 30 companies, including 10 banks from Switzerland and Liechtenstein. In the first two workshops, the following insights have been gained so far:
Community workshops have also taken place within the framework of the Open Banking Network, with the vision of "Efficient and sustainable connection of TPPs and banks". An overall outline for a hybrid implementation of Open Banking (analogous to Open Banking UK, PSD2) in Switzerland was drawn up. The next steps will now be defined in the upcoming STA together with the partners.
OBP plans to conduct a survey this year to structure new open banking use cases. In particular, the relevance and priority of Open Banking use cases should be ascertained among Swiss market participants (banks, providers, TPPs).
Discussion Panel "Open API as an Enabler for Ecosystems"
The discussion panel consisting of Aniello Bove (Andrion), Ralph Hutter (Finnova) and André Renfer (HBL) was moderated by Simon Bleher (BEI). The panel focused on the following four hypotheses.
Hypothesis 1: Open banking is the "enabler" for companies to position themselves in ecosystems or networked business models in the future.
The panellists agree that Open Banking is not the only driver in the context of ecosystems and networked business models. However, Open Banking is definitely a valuable aid that supports the banks in the necessary further development or expansion of their business models. Through Open Banking, new solutions and collaborations with third-party companies can be made possible much faster and more efficiently. However, there is still little movement on the part of the Swiss banks at the moment. It is mainly fintechs that are trying to use Open Banking as an opportunity. The banks have to think strategically about how they want to position themselves with Open Banking and how they will generate income from the opening of their business model in the future. Ultimately, it is above all the technical opening and standardised APIs that can be seen as enablers of networked business models.
Hypothesis 2: Open banking is the catalyst of innovation and value-added services in the financial industry
In view of the original goals of Open Banking in the UK and under PSD2, this hypothesis is quite correct. The opening of the banks and the corresponding availability of the end customers' data enables innovative companies to bring their services to the market or to the customer much more efficiently and securely. Overall, these developments are however still not very noticeable in the Swiss financial centre.
Hypothesis 3: With only 10 APIs, a large part of all Open Banking use cases can be covered (e.g. 1 KYC, 2 Numbers, 3 Create, 2 Finance, ...).
The panellists basically agree with this hypothesis. From a banking perspective, there are about 10 core processes with which a large part of all use cases can be covered. The goal of the banks should now be to make these core processes adequately accessible to third parties. This step then opens many possibilities for combining and integrating banking services in a wide variety of use cases.
Hypothesis 4: The scope of open banking is not understood in Switzerland, which is why the banks are closing their minds to this development.
Compared to the UK and other European countries, open banking is only slowly beginning to develop in Switzerland. The panellists would like the Swiss banks to join the domestic open banking initiatives and join forces to promote open banking. In this way, a critical mass can be reached as quickly as possible and the attractiveness of the Swiss financial centre can be secured in the long term.
We would like to thank all participants and speakers for this exciting event and are already looking forward to the next members' event, which will take place physically in the Zurich area on 4th May 2022.