9 Open Banking API Examples (With

Use Cases)

Table of Contents
 What Are Open Banking APIs?
 What Are the Benefits of Open Banking APIs?
 Banking API Portals
 9 Open Banking API Examples
 Authentication and Identity
 Payment Processing
 Account Aggregators
 Data Analytics
 Budgeting and Financial Planning
 Credit Scores

 Business Accounting

 Subscription Management
 Tax Management
 Final Thoughts

What Are Open Banking APIs?

An Open Banking API is an application programming interface that allows third-
party developers to access customer data and bank systems.

This type of API can be used to develop new applications and services that make use of
banking data, such as transaction history or account balances.

Access to these APIs is based on a series of EU regulations known as the Second

Payment Services Directive (PSD2), which aims to promote trust, competition and
innovation in the banking sector by making customer data more accessible.

Just as Google offers an API that allows developers to access its search engine data
and build new applications on top of it, banks can now offer similar APIs to allow third-
party developers to access their customer data and build new services.

Customers must give their explicit consent for third-party developers to access their
data, and banks must provide a secure way for this data to be shared.
What Are the Benefits of Open Banking
APIs?
There are many benefits of open banking APIs for developers, businesses, banks and
customers.

For banks, open banking APIs offer a way to modernize legacy systems and make them
more agile. They also provide a way for banks to partner with fintech startups and other
innovative companies to create new products and services.

For customers, open banking APIs offer a wide range of features and services. They
can allow customers to view their account balances and transaction history from within
the app. They can also enable customers to make payments or transfer money between
accounts.

In addition, open banking applications could provide features such as budgeting tools,
expenditure tracking, and financial goal setting.

Open banking APIs are a win-win for both banks and customers. They offer a way to
modernize banking and make it more customer-centric.

For developers, these portals establish a level of trust with banks and businesses and
open up a world of opportunity to create new banking applications.

Banking API Portals

Several major banks have already started offering open banking APIs to third-party
developers.

For example, HSBC has an API portal that allows developers to register and access
HSBC’s APIs. The portal also provides documentation and support to help developers
get started.

Barclays has also launched an open banking API platform. The platform provides
access to a wide range of Barclays’ APIs, including APIs for account information,
payments, and transactions.

Bank of Scotland offers APIs and open data for developers relating to ATM and branch
locations, as well as several product specific options for creating new customer
interactions.

Wells Fargo also has an API portal that offers a suite of tools and sample code for
developers along with a testing environment.
 And newer digital banks, such as Ally, have also opened their APIs for developers
looking to create financial applications.

These are just a few examples of the many banks that are already offering open
banking APIs.

For an updated list, have a look at this open banking directory.

Let’s now look at some popular open banking API examples to see how this
technology is being used in practice.

9 Open Banking API Examples

The following use cases demonstrate how open banking APIs are being used to create
value for businesses and customers.

Authentication and Identity

Open banking APIs can be used to authenticate customers and verify their identity.

This helps to prevent fraud and ensures that only the customer has access to their data.
It also helps to streamline the customer experience by eliminating the need for
customers to remember multiple passwords.

Examples:

 LoginID is a low code solution that allows banks to use a biometric digital signature to
confirm transactions and authenticate users.

 Salt Edge offers a Mobile SCA (strong customer authentication) application to handle
dynamic linking and meet strigent SCA requirements.

Payment Processing
Open banking allows businesses to authenticate payments directly between consumers
and their banks.

This helps to prevent fraud and ensures that payments, including international transfers,
are processed quickly and smoothly. It also creates significant opportunities for
developers to offer innovative solutions.

Examples:

 Adyen is a payment processing company that offers open banking APIs for account
verification and payments processing.
 Fena is an app that allows users to transfer money between accounts quickly and
easily.
 Wise (formerly TransferWise) allows you to transfer money abroad easily and quickly
with low-cost money transfer options.
 Tikkie is an online Dutch payment app from ABN-AMRO that allows users to send
payment via Whats App, text message, email and more.

Account Aggregators
With account aggregators, consumers can easily view all of their financial accounts in
one place.

This gives them a complete overview of their finances and helps them to make more
informed decisions about their money.

Examples:

 Plaid is a popular account aggregator that connects with over 11,000 financial
institutions in the US, UK, Canada, and Australia.
 Yodlee is another account aggregation platform that offers APIs for developers to create
financial applications and allows users to see multiple accounts at once (i.e. credit card,
bank, investment, reward accounts, etc.)

Data Analytics
Open banking APIs also provide access to valuable customer data that can be used for
marketing and analytics purposes.

This data can help businesses to better understand their customers and develop more
targeted products and services.

Examples:

 Finicity is a financial data aggregator that offers an API platform with direct data
agreements with large financial such as Chase, Wells Fargo, Capital One, CitiBank,
Fidelity and more.
 MX offers open finance APIs to enable banks and companies to do more with financial
data by aggregating, securing, and optimizing data.

Budgeting and Financial Planning

Personal finance is one of the most significant use cases for open banking APIs.

These apps can track user goals and spending habits and provide a suite of tools and
recommendations for how to save and spend money more effectively.

Examples:
 Mint is a popular personal finance platform that offers budgeting and financial tracking
tools.
 Emma is UK-based app that gives users an easy way to track, invest and save money.
 Pocketguard is a personal finance management application that enables users to
connect all their financial accounts and create budgets, track their money and
categorize their expenses.

Credit Scores
Open banking gives a more in-depth and personalized look at a consumer’s credit
history by combining data from multiple sources.

This helps to provide a more accurate picture of an individual’s creditworthiness and

financial history.

Examples:

 Experian Boost helps people with little credit history by giving them credit for on-time
utility, telecom and certain streaming service payments.
 Credit Kudos enable businesses to leverage Open Banking to enhance affordability and
risk assessments.

Business Accounting
Open banking APIs can streamline the accounting process for small businesses by
automating the collection and categorization of financial data, including revenue and
expenses.

This can help businesses to save time and money by reducing the need for manual data
entry.

Examples:

 Xero is a popular accounting software that allows users to connect their bank accounts,
imports transaction data, and streamlines accounting for small businesses,
bookkeepers, and more.

 Sage integrates with banking platforms to automate bookkeeping and accounting

workflows, speed up payments and manage cash flow.

 Wave connects with bank accounts and synchs across platforms to offer a user-friendly
“one-stop money management” solution for small businesses.

Subscription Management
We all know that too many recurring subscriptions can drain expenses and cause a real
headache for consumers (and banks).
 With open API platforms, users can see all of their subscriptions in one place and
cancel or modify them as needed.

Examples:

 Subaio is a Dutch subscription management service that integrates with online bank
accounts and allows users to view, manage, and cancel their recurring subscriptions.
 Bud is another subscription management solution for banks allowing customers to keep
track of and cancel subscriptions.
 Trim analyzes your transactions and finds and cancels your unwanted subscriptions

Tax Management
Open banking APIs can help businesses and individual taxpayers to manage their tax
obligations by providing real-time visibility into financial data and even filing directly with
your tax filing agency.

These apps also offer self-employed and small business accounting features to help
users track expenses and income.

Examples:

 Coconut is a UK finance app that allows self-employed users to manage business

finances and work out the correct amount of taxes owed.
 FreshBooks is a very popular accounting platform for solopreneurs and small
businesses that includes a number of features, including tax reporting.

Final Thoughts
As you can see, there are a number of ways that open banking APIs are being used to
create new and innovative financial products and services.

APIs are giving users more control over their finances, providing new insights into
spending and saving habits, and simplifying the accounting process for businesses.

We can expect to see even more open banking API examples in the near future
as banks undergo different phases of digital transformation and fintech startups
continue to push the envelope.
 Everything You Need to Know
About APIs and How They Relate
to Banking
APIs (application programming interfaces) are simply communication tools for software
applications. APIs are leading to key advances within the banking industry as financial
institutions continue to collaborate with third parties.

What Are APIs?

Simply put, APIs are software applications used to develop other apps that connect to
other firms’ pre-existing technology. By using APIs, banks can offer a more seamless,
efficient customer experience. In turn, innovative solutions are created that solve
specific banking problems. Problems such as a high number of failed payments,
noncompliant or inefficient international payments, managing internal roles and
responsibilities, changing or canceling payments on short notice, and more.

There are currently three types of APIs, all of which provide a gateway to more
innovative solutions. These include:

 Private APIs — Most commonly used within the traditional banking organization, private APIs
help enhance operational efficiency and are viewed as essential by the vast majority of banks.

 Partner APIs — Typically occurring between a specific third-party partner and a bank, partner
APIs allow for expansion, especially in relation to new channels, products, etc. For example,
through an API partnership, a bank could work with a separate third-party company to
automatically create loan documents in relation to loan applications. This would also allow the
bank to automate loans, increasing efficiency. Most banks will gradually transition from private
to partner APIs.

 Open APIs — The least commonly used type of API, this structure involves making business
data available to third parties. In this case, banks are often concerned with the security of data
and other sensitive client information.

The Link Between APIs and Financial

Institutions
If you’re currently in the banking industry, you know that your customer’s experience is
imperative to your success. In today’s digital banking age, banking applications are in
high demand. After all, the public wants an easy-to-use experience that offers the latest
digital services.

One key study recently found that out of the 2,000 Americans surveyed, 31 percent use
their mobile banking app the most — more than social media or weather apps. The
demand is increasing so much that 91 percent of users prefer to use their banking app
than to physically go into a branch.

Banks are now taking advantage of APIs, as they add new revenue streams, increase
access to additional customer data, encourage future innovation, and more. They also
support the development of new distribution channels.

In addition, by taking advantage of APIs, banks can provide a deeper, more efficient
experience for their current and future customers. This is particularly true of the
customers' ability to seamlessly interact with various service providers. Overall, APIs
improve the customers' experience based on greater freedom, flexibility, and
personalization.

By offering customers a powerful lineup of banking solutions, your bank can become an
unstoppable force of function, speed, and efficiency. Whether you’re interested in a core
information module, an all-in-one banking machine, or a more efficient wire transfer
system, FPS GOLD assists financial institutions by providing state-of-the-art banking
software. Our powerful APIs allow for customization that can meet the needs of any
bank.

Examples of APIs in Banking

There's a reason why API-based products are gaining so much traction within the
financial marketplace, as customers demand more immediate, seamless banking and
payment options. After all, the way customers interact with financial institutions is rapidly
changing.

Just a few key examples of banking APIs include analytics, account authentication,
account information, payment processing, and even loyalty programs.

Banks are using APIs for one or more of the following four main reasons — reach,
speed, domains, or the Internet of Things (IoT). In turn, operations become more
efficient, and all parties mutually benefit.

For example, a bank may develop a mobile app that allows customers to access their
account details as well as information about ATM locations, branch hours, etc. In order
to optimize their app, they would need to use an API to connect with a third party. This
would allow the bank to offer even more features, such as information on credit scores,
mortgage tools, etc.

From making it easy for customers to check their credit scores to using mortgage tools,
the API methodology has many applications within banking.
Another great example would be FPS GOLD's API associated with our partner, MX. By
creating an API that specifically works with MX's account aggregation product, banks
that offer mobile or Internet banking can provide their customers with a much better
experience. With the ability to see their spending habits through a simple, digestible
dashboard, customers can get the most out of their banking services.

APIs also make it easier for banks to partner with major credit card companies,
brokerage firms, and other large corporate clients who streamline and optimize the
customers' experience. The end goal is to drive more business and obtain new
customers — all while ensuring current customers are satisfied.
API Banking: How to implement it on
FinTech client example
Everywhere we look around us, we can find APIs. For example, a restaurant’s website may
have embedded Google Maps, so you know where to find it. That’s done using an API. And
if you’re reading an article and you see live tweets with further information, that’s made
with the help of an API as well.

But the real revolution is coming with the introduction of API Banking. With it, banks can
now provide a better digital experience to their customers while also ensuring their data is
perfectly safe. But the API access also allows them to work now together with the Fintech
companies and for example, embed their banking APIs into non-financial apps.

That way, having an Open Banking API can increase a bank’s appeal and allow them to
respond to quickly changing customer demands. But what is it, and how does it work?

In this blog post, we will discuss all you need to know about API banking. So if you’re ready
to take your business to the next level, read on!

What is API banking, and how does it work

Basically, an API (Application Programming Interface) is an interface through which it’s

possible to sync, link, and connect the service database with any application. You can say
they serve as a bridge between an app and service that ensures data transmission in a
secure manner without involving third parties.

API banking meanwhile refers to a set of protocols that makes a bank’s services available to
other third-party companies via API. In this way, banks and third-party companies can
combine their offerings and offer a much wider range of services to their customers than
they could otherwise.

One of the most common examples of using an API in banking is creating a mobile banking
app for the customers. Those apps allow customers to check account balances, transfer
money, pay bills, and more, straight from their phones. But customers can also use these
applications to track their spending, budget better, and find new ways to save money or
buy additional services offered by third-party companies.

The benefits of using API banking

In 2021, 47% of banks and credit unions (CUs) have invested in or developed APIs, up from
35% in 2019. Another 25% plan to invest in this technology in 2022. But just what makes
banking API so appealing?

Perhaps the most obvious benefit is that APIs make it easier for banks and other financial
institutions to share data, integrate with systems, personalize their services, or add new
services to their offering. So now, when data transparency and easy sharing between
parties are crucial, banking API allows companies to do exactly that while also improving
internal security (all banking APIs have to meet strict compliance and security
requirements).

But there are a couple of other benefits: the vast amount of data the API can gather and
store can be a goldmine of information for the banks and help them tailor their service to
the customers’ expectations. The more personalized the products and services, the less
your customers turn to your competitors. And since the data is collected automatically, you
don’t need any more to spend time managing the data yourself.

Collaboration with other banks and third-party institutions can also prove to be incredibly
profitable. By gaining access to user data from other participating financial institutions
(particularly other banks), banks can market their products and services to a much wider
audience. This opens up a world of potential for banks to develop their own integration-
based financial services.

In addition to being extremely useful for businesses, APIs are also very helpful for
consumers. Using an app saves time spent on transactions, makes any service or product a
consumer might need straight away, and helps them with managing their finances.
Those apps also helped reduce many administrative hurdles for the customers, such as the
paperwork needed to apply for a loan or check their creditworthiness, making banking
services more accessible than ever. Being able to access other related services they might
need (like insurance) straight from the app is also a massive time-saver for the customers –
they don’t need to spend time searching for a provider, they can have a tailor-made offer
for them available straight from the app.

With all those benefits, is it any surprise that experts predict that by 2026, the global Open
Banking market is expected to reach $43.15 billion?
 How we do it: API banking x TMS

Now, what does building such an API look like? We could go through the theoretical steps
of creating one, but instead, we’ll show you an example of one by looking at how we built
an online currency exchange API for TMS Brokers company.

What was the project?

TMS wanted to enhance its online virtual currency exchange office with new functionalities
for the users, such as new types of transactions and ways of authorizing those. It was
especially important for them to improve onboarding and exchange processing.

What was the challenge?

This project involved expanding the user panel’s functionality and other elements of
the currency exchange platform. The company’s main goal was to streamline and automate
the currency exchange process for the users and give them new types of transactions to
use.

What is the outcome?

We have added new features for individuals and companies to the app, including:

 New types of transactions (SPOT+ and NETTO)

 An expanded admin panel

 Bank integrations (PKO BP, Alior, Santander)

 The option to make deposits,

 SMS authorization of critical actions,

 The option to share an account and assign roles to individual users,

 A widget that allows partners to present TMS platform courses on their websites,

 A feature that allows monitoring the flow of money within the organization,

 Accounting process automation,

 Enabling partners to execute transactions using an open API.

Our team has also optimized the platform’s overall work by fixing bugs, reducing the
likelihood of new ones occurring, and optimizing the deployment process. Currently, we
are working on full internationalization of the application and adapting it to enter the
English-speaking markets, plus implementing a Polish product to one of their product.

We also keep working with them on maintaining, optimizing, and developing this platform.

The future of API banking

While banks and financial institutions looked at API banking with some dose of reserve and
hesitation at first, the benefits of those speak for themselves. From frictionless payments
to more secure and simple ways of paying, there are enormous benefits for merchants,
payment providers, open banking operators, and consumers alike.

That’s why more and more banks and financial institutions but also Fintech companies, are
joining the trend. The number of new Open Banking customers has increased by 60% over
the last year, totaling 3.9 million consumers and 600,000 small businesses. With 1 million
regular and active users joining Open Banking every 6 months, it now has over 4.5 million
regular users.

And this is just the start – what more can we expect to see from banking API technology?

Globalization of FinTech industry thanks to modern tech solutions, including API banking

The digital transformation that was supposed to take a decade is happening right in front
of our eyes – and API banking is one of the best examples of a Digital Transformation of the
financial industry in recent years. Banking apps, “Buy now, pay later” options, and seamless
mobile payments are just the start though.

New UE regulation, Payment Services Directive 2, forced banks and financial institutions to
implement modern solutions to fit into the regulations affecting their systems’ security,
privacy, operation, or management. Depending on the country, the process was quicker or
slower. But the effects are already visible. Thanks to the digital revolution, companies from
the finance industry can now partner with Fintech companies from all over the world and
work together on creating a better banking experience for the customers.
Soon, it might also be possible for the customers to pick a financial service coming from a
different place than they are just as easily as signing for a local one – and that’s all thanks
to open banking.

Linear Journeys will shortly be dead.

Customers’ expectations have changed over the years. They are no longer happy with just
visiting the bank or calling whenever they want to check their account. No, now they expect
banks to provide an omnichannel experience for them so that they can use their funds,
track profits, or manage their data, anywhere and anytime.

It’s also why assuming that all customers will behave in a linear manner is no longer
feasible. Rather, banks and financial institutions should give customers the option to use
the banking services however it is convenient for the users.

And this is one of the key things API banking will change – it will concentrate multiple
financial services in one place so that customers can have quick and easy access to all their
data, even from different banks or providers.

What else could financial institutions do here? Mobile app and web app creators
specializing in FinTech could integrate banking into numerous 3rd party applications,
letting users use their mobile devices far more efficiently. That way, customers won’t have
to go to a physical bank to make a money transfer or set up a subscription – they can make
a payment anywhere.

Consumers nowadays want to be able to use their funds as easily and seamlessly as
possible, so from a technical perspective, API banking is a must-have for all financial
institutions.

Banking API as a source of centralized data for the Artificial Intelligence

Integrating multiple services into one place and gathering user data from there can
drastically improve institutions’ ability to find more about the customers and then build a
complete profile of their customers. But the vast stream of data can be just as useful for
teaching Artificial Intelligence-powered tools how to process and understand each of the
customer’s needs.
Thus, AI could be a great asset to the financial sector, helping them segment and convert
consumers, predict business trends, and recognize issues or challenges. What’s more, AI
could free the employees of some manual, tiresome tasks (like manual lead scoring, risk, or
assessment) and also manage big data for them, letting companies tailor their service to
each and every customer.

Since the AI potential hasn’t reached its limits yet (more like we are just starting to learn
about its full capabilities), we can expect to find even more uses for Artificial intelligence in
the banking industry in the future.

Conclusion

Giving your customers a superb experience is now virtually a must, especially if you want to
keep customers using your financial services. And taking advantage of API banking
technology is currently one of the best ways to give them easy access to those. Several top
banks have already launched their API services, and many others are expected to do the
same soon – so if you want to gain a competitive edge, you should start thinking about
introducing banking API’s to your business.

However, if you are unsure where even to start, why not let us help? At Crustlab, we are
experienced in implementing banking APIs, so we understand both the development
process and the strict compliance law. Soon, you might have your own app – and can reap
the benefits.
PSD2: What does it mean for FinTech
Bringing in PSD2 will result in a fundamental shift in Europe’s payment legislation. This will
revolutionize the entire financial industry, impacting everything from how we pay online to
what information we see when making a payment, all so customers can easily access
banking services. But because adapting to the new requirements would require a lot of
work and investment in the industry, the date when PSD2 was supposed to go into effect is
constantly changing.

First, the directive was supposed to take effect in January 2016. Then, it became fully
effective on 14 September 2019 for all countries in the European Union. However, due to
delays in implementation, the European Banking Authority granted an extension until 31
December 2020. Meanwhile, in the UK, the new deadline will be 14 March 2022, set by the
Financial Conduct Authority.

What is PSD2, and why it took so long to implement it? And most importantly, what does it
mean for customers and Fintech companies?

What is PSD2, and what does it stand for?

PSD2 (Payment Services Directive 2) is the EU’s attempt to both encourage innovation in
the financial industry, make the online experience smoother for the customers and also
curb the online fraud attempts at the same time. As part of the initiative, PSD2 aims to
create more innovative ways of making online and mobile payments, improve payment
security and also give the consumers control over who and how uses their personal data.

What’s equally important is that directive will level the playing field for all payment
providers in Europe (including Fintech companies and new companies), aiming to create a
more integrated, safer, and efficient European payment market. That will give consumers
from all European countries far more options when it comes to retail payments, as well as
far more knowledge and control over the payment services that have access to their data.
What are the key points of PSD2?

The main areas PSD2 will affect are customer authentication, data security, and third-party
access to consumer accounts. First of all, this new regulation will require all online
transactions to be verified with multi-factor authentication (MFA). The authentication
elements should also be independent so that in case of a security breach, the other
verification method will still be reliable.

But to make it simpler for online banking consumers, the Regulatory Technical
Specification (RTS) directive identifies several situations in which PSPs (Payment Service
Providers) are not required to perform strong customer authentication – such as low-value
payments, repetitive transactions, or transactions to trusted users.

Furthermore, PSD2 also established a set of standardized regulations for banking services,
such as the Strong Customer Authentication (SCA) regulations and Common and Secure
Communication (CSC). To conduct payments within the EU, all financial institutions and
payment service providers must comply with new legislation. The legislation is also meant
to encourage financial institutions as well as Fintech companies to include new methods of
customer verification in their business – such as voice and fingerprint biometrics.

The other key change is that PSD2 will allow third-party companies to access the
customer’s bank data, as long as they have the customer’s permission. Until now,
consumers’ financial information and data have been held by the banks and them only.
PSD2 meanwhile handles the control over the data back to consumers.

The “Payment account information services” will enable customers to check their bank
account status online – and if they have multiple bank accounts, they can view all of them
in one place. This will help customers manage their accounts more easily and make
internet and mobile payments easier. It will also help customers make better comparisons
when shopping.
What is Open Banking?

Open Banking Open banking is a practice that allows third-party payment providers and
other financial institutions to get secure access to customers’ banking transactions and
other data from banks and financial institutions. Third parties can access the data via
application programming interfaces or APIs. Open banking is becoming increasingly
popular as people start to demand faster and easier payments method.

As Open Banking enables faster, more secure transactions across borders and gives
consumers the option to manage their finances through third parties, this gives them more
choices and better service but also faster transactions than ever before.

How does it work in practice? Let’s take eBay, for example. Whenever you make a purchase
there, you are redirected to a payment service (Paypal, Visa, or your local banking service),
where you first have to log in and confirm the payment before your purchase can be
accepted.

With open banking meanwhile, you could use Amazon or Paypal to send money or gifts
securely to friends with a simple click or swipe. As long as you gave permission to those
companies to access your banking data, you could just click on the “Buy now” button or
“Send money to…” and let Amazon and Paypal handle the rest. In fact, you could even ask
your virtual assistant like Siri or Alexa to handle the transactions for you – simply by asking
Alexa to pay your regular phone bills or send money to a friend.

Having access to your bank account information might also enable you to take advantage
of new, targeted financial services that improve your control over your data. For example,
many of us have accounts at multiple banks or brokerage firms. Using Open Banking, you
can combine all of your account information into a single dashboard that shows all of your
money in one place. By doing so, you could have a better idea of where you stand
financially before making any significant financial decisions and manage your finances
more effectively.

What are the vital PSD2 benefits for consumers and businesses?

All this talk about regulations, security procedures and requirements might sound pretty
complicated. Especially since it wasn’t that easy for financial institutions to implement the
regulations. Plenty of them had to change how their whole infrastructure worked to add
the necessary security measurements. In addition, most brands feared that adding
verification steps to their current SCA would upset their customers since it would require
more effort on their part as well as be costly and time-consuming for them.

As banks are now also responsible for mitigating fraud risk, they also needed to invest in
advanced fraud prevention measures such as advanced analytics (to validate the origin of
inbound API calls), customer authentication technology, and tools to detect fraud attacks.

And there were dozens of technical issues companies had to tackle while preparing for API
integrations as well.

But in exchange, PSD2 can also bring multiple benefits both to customers, banking
institutions, and Fintech companies.

For customers, it will make accessing banking services (even those in different countries)
far easier. For example, let’s say you moved to France from the UK and want to open an
account in one of their banks and take a loan. But the bank doesn’t know anything about
your financial history or credit score, so you are (most likely) declined.
 How would PSD2 change the situation? The bank where you want to open an account
would just need to ask for your permission to access your financial data, and then it would
be able to review your entire financial history from the last few years. That way, they would
have enough information to decide can they give you a loan and how much they can offer
you based on your credit score.

But that’s just the start of the benefits PSD2 can hold for the consumers:

 As it introduces strong security requirements for electronic payments and financial data protection,

it can help to lower the number of fraud or security breaches cases.

 Under the new regulation, all third-party payment providers will be allowed to initiate payments for

their customers or give them an overview of their accounts and balances.

 The new directive increases consumers’ rights in multiple areas, from allowing them to choose who

has access to their financial data to reducing consumers’ liability for unauthorized payments.

 Surcharges (additional charges for payments and money transfers) are now forbidden.

 All member states of the European Union are obliged to designate competent authorities to handle

complaints from payment service users and other interested parties who feel that their rights are

being violated. Payment service providers must also respond to complaints in writing within 15

business days.
But for the banking industry and Fintech companies, the new European directive can be a
massive opportunity as well. While many traditional institutions see it as a threat to their
position (since it allows new companies or FinTech businesses to compete with them), the
vast amounts of data they have now and to which they can get access might give them an
advantage.

For example, they can use their data to tailor their service and offers to each customer,
boosting the trust customers have in them. Partnering with third-party companies may also
be profitable for the banks. As an example, they could ask Fintech companies to create
innovative products for them that will improve the customer experience while also allowing
them to maintain their position as trusted advisors. Meanwhile, for Fintech companies, that
would be a fantastic opportunity to expand their offering into new markets and collaborate
with banks to develop new products.

Using new technologies such as voice biometrics or payments, financial institutions could
also gain a considerable advantage, as they would not only make banking services more
convenient for regular users but much safer as well.
In an age when a friction-free customer experience is more important than a low price,
partnering with other companies to boost customer experience might be just what
financial institutions need to stay competitive.

Conclusion

Does PSD2 threaten the banking industry? Absolutely not. Businesses that take advantage
of Open Banking & PSD2 can benefit consumers tremendously but also gain a lot
themselves. By aggregating their financial products in one place, personalizing their offers,
giving insights to their customers, or providing them with new ways to verify themselves or
make payments, they might benefit from the new directive more than they anticipated.
 Open Banking and Financial APIs: How
to Integrate Your Company with the
Digital Financial Ecosystem
The financial services industry is one of the most regulated sectors of the world
economy. Bank secrecy, security terms, the lack of trust in technology, and strict
regulations slow down industry development from the tech perspective. As result,
the industry with its broad potential for digital development significantly
underutilizes its opportunities, especially in terms of customer experience and data
sharing. The open banking concept zeroes in on disrupting the current status of
banking and improving nearly all aspects related to ownership, sharing, and
utilization of customer data.

What is open banking and how is it related to bank

APIs
The concept of open banking supposes that banks provide access to user financial
data to players in other industries to 1) foster a competitive environment between
larger and smaller companies and 2) improve customer experience. As users
consent to share their personal financial data, banking institutions can distribute
information via open application programming interfaces, or APIs for short,
allowing third parties to leverage this data and create personalized services with a
seamless user experience. For instance, users can integrate their existing bank
accounts with third-party apps to conveniently track their expenses and follow their
individual savings plans.

As we mentioned, the technology behind open banking is using APIs. An API is a set
of functions which allow for sharing data and requests between systems, usually, in
a controlled, secure manner. There are three types of APIs currently applied in
finance:

 Internal APIs used for sharing data across internal systems and users.
 Private APIs that let banks exchange data with their partners.
 Open APIs (public APIs) that allow for sharing data with a wide group of users while
providing limited access to information.
 Source: McKinsey

The open banking concept gained significant popularity after 2015 when the
European Parliament adopted a new payment services directive known as PSD2. It
obligates EU banks and the 9 largest banks in the UK to provide developers with
access to customer data via open APIs. However, the general idea isn’t anything
new. Such providers as Mint, Personal Capital, and Numbrs had been leveraging
data from customer bank accounts before PSD2. These aggregators combined
information from several user’ accounts to store all information in one place.
Unsurprisingly, customers had to share usernames and passwords for each
account with these aggregators making the whole system vulnerable to privacy
risks. Early “open banking” projects were scraping data from shared sources, but
the records were often incomplete and provided only a partial picture. These
projects were difficult and expensive to support: If a bank decided to redesign its
application, scraping became impossible. Open banking APIs solve that problem by
providing access to standardized data in a secure manner.
 Payment Services Directive Explained
So, what is PSD2? The Second Payment Services Directive (PSD2) is a legal
framework that regulates payment services through the EU and EEA (European
Economic Area). The directive supports innovation and development of an
integrated payment market across Europe. The new regulatory document was
adopted in October 2015. It was a logical extension of the original PSD, which was
designed in 2007 to increase competition across the payment industry. The new
directive is focused on making cross-border payments easy and secure.

PSD2 integrates open banking and APIs with the financial business industry
ecosystem. Third parties can access customer bank account data, based on
customer approval. It allows non-bank institutions to build value-added services on
top of the banking data and ecosystem. The regulation adds two new roles to the
industry landscape:

AIS or account information service: an online aggregator which consolidates data

from several customer accounts.

PIS or payment initiation service: a system that allows for managing funds and
initiating payments on a customer’s behalf.

This way, providers can receive holistic user data and initiate financial operations
after a user consents to such actions.

PSD2 came into force in January 2016. In November 2017, the European Banking
Authority released the final version of Regulatory Technical Standards (RTS), which
defined general requirements for APIs and guided the implementation method of
PSD2. Each country in the EU had to integrate the directive into local legislation by
January 2018. By now, two important milestones are yet to be reached:

1. Banks must suggest open APIs to third-party providers for integration and testing in
March 2019.
2. All open banking APIs must be ready for implementation and meet the RST by
September 2019.

Neither banks nor third parties are fully satisfied with the current process. There
are many challenges for implementation such as security issues, usability, and
access to data. If the merchants fail to prepare APIs in time, they will have to
consider an alternative way to access customer data.
 Open banking has both positive and negative possible implications for banks

Tight deadlines force banks to work faster on API preparation and innovation in
customer-facing technologies. And slow movers risk losing their market shares in
Europe. Another potential threat is losing interaction points with end customers. In
this case, traditional banks may transform into faceless utility providers. However,
those bankers that successfully meet the requirements will eventually improve user
experience in customer apps and gain competitive advantage.

Open banking opportunities and benefits

Ultimately, all parties in the financial value chain can benefit from digital
transformation opportunities offered by open banking. Someone may disagree and
argue that open banking is a threat to traditional industry incumbents because
traditional institutions have to share customer data and lose the exclusive right to
it, despite the fact that this information was gathered and stored for decades. This
is definitely a great risk for brick and mortar players, but at the same time, it
encourages them to innovate. Let’s have a look at how the major stakeholders will
benefit from the open banking initiative.
 Source: McKinsey

Better user experience. The banks will improve customer experience and
enhance distribution across digital channels. Open APIs let banks easily integrate
their services with third-party platforms, apps, and products. Open banking also
makes cross-border expansion easier.

Lower operational costs. Another benefit is cutting operational costs, as banks

can spend less time supporting foreign subsidiaries providing some services
directly from the home market.

Higher competition. Customers will benefit from increased competition in the

financial industry as prices will go down and service quality will go up. For example,
customers will be able to use financial services aggregators to compare offers from
banks and other institutions. They’ll also get remote access to a number of
products that used to be available in branches only.

Added value from third parties. Third parties can access banking data, allowing
them to design new products, innovate, and create additional value for bank
customers. As trust in non-bank payment providers grows, open banking provides
such companies with a number of opportunities in the financial services market.
 Source: McKinsey

Agile organizations will enjoy the major benefits of open banking (PSD2)
implementation across the EU. The biggest potential winners are fintechs,
according to McKinsey assumptions. An important implication is that IT service and
telecommunication companies will also be among the winners. Bankers are ready
to engage with external service providers to reach open banking compliance, as
developing sophisticated transformation projects within tight deadlines will likely
require external expertise.

Open banking API standards and specifications

Standardization and specification are critical for the development of public bank
APIs. (a common tech standard for APIs) provide developers with relevant guidance
on this topic. Though developers usually follow the general REST practices, they still
may introduce quite different implementations for the same type of APIs. This lack
of standardization will require customizing interfaces and systems for each API
 independently. This inconsistency can be eliminated by applying the guidelines
from bank organizations and consortiums such as in Germany. Deep
standardization reduces entrance barriers for fintechs and others.

How to implement public APIs in bank operations

Implementation of the open data concept requires a lot of engineering work. We’ve
considered several recommendations on open banking strategy implementation:

The environment is highly competitive; the right strategy will allow for a timely turnabout

1. Identify a strategic goal of open banking implementation. There are multiple

service domains (e.g. payments, finance tracking) and finding the one to focus on
will allow for incremental and gradual development with minimal risks.
2. Prepare to be in both roles – that of early adopter and follower. The
environment is very competitive: Banks develop different sets of APIs that may or
may not turn out to be demanded by the market. You should prepare a mechanism
for fast hypothesis testing and scaling up successful projects while killing the rest.
 This means pioneering in some implementations and following a well-worn trail in
others.
3. Clarify the goals. Evaluate the impact of each open banking API implementation in
your institution. These may be additional revenue, increase in market share,
geographical expansion, etc.
4. Assess the data reserves across the organization. A financial institution should
conduct a data audit to determine which types of customer data is available for
internal and external utilization. The bank should also assess the data potential for
machine learning and other analytic approaches to improve fraud detection, credit
scoring, pricing, and cross-selling.
5. Prepare the product development strategy for each open API. Banks should
prepare a data management system, make appropriate changes to enterprise
software architecture of internal systems, check compliance with legislation (e.g.
PSD2 for the EU banks), etc.
6. Choose the right means for project delivery. A financial institution can build a
completely custom API or utilize a semi-ready solution by such providers as Open
banking project. Even the implementation of a semi-ready solution requires a lot of
engineering work, so it might be reasonable to choose a reliable technology
consulting partner to support the software engineering part of the project.
7. Prepare to build a partnership ecosystem. Cooperation with third parties allows
banks to create value-added services, increase customer retention, and gather
additional customer data.

Examples of open banking and other fintech APIs

Nearly each bank in the EU will have a set of open APIs by 2019. Currently, there are
529 results for query “bank API” on the ProgrammableWeb. But the real number is
much larger and it isn’t limited to EU-based institutions. There are numerous
financial API providers, so we won’t pretend that we show the most comprehensive
list of bank APIs that comply with the open banking concept. Some banks fail to
provide well-prepared documentation and information about pricing, which made
the selection of examples more difficult. So, we’ve curated some of the most
relevant examples.
 Source: AltexSoft

Payment and Account Data APIs

Bank of Cyprus APIs. Bank of Cyprus (BOC) is the largest merchant group in
Cyprus and operates over 120 branches across Europe.

 Geography: Cyprus, Russia, UK, Romania, Greece etc.

 Audience: N/A
 Functionality. BOC APIs provide access to account information, allow making
personal payments through SEPA/SWIFT, grant access to corporate payment, and
create subscriptions with customer approval.
Barclays APIs. Barclays is one of the largest and oldest banks in the UK. It operates
via 4,750 branches worldwide. The bank targets four core segments: retail banking,
corporate banking, wealth management, and investment management. Barclays
provides a wide set of APIs for developers. Additionally, the company launched
Barclays API Labs, which facilitates the testing of innovative APIs in the products
and provide feedback to Barclays.

 Geography: 55 countries (UK, USA, France, Brazil, India, China etc.)

 Audience: N/A
 Functionality. Barclays APIs allow managing authorization, initiating payments,
retrieving account and transaction information, resaving customer card
information, sourcing product details, checking ATMs and branch location.
BBVA APIs. Banco Bilbao Vizcaya Argentaria (BBVA) is the second largest merchant
group in Spain, which operates across the EU, UK, and USA.

 Geography: 30 countries (EU. Argentina, USA, etc.)

 Audience: 15 million clients
 Functionality: The bank provides access to customer profiles, accounts, and card
data. BBVA APIs allows initiating payments, customer and corporate notifications,
getting access to business account information.
Deutsche Bank APIs. Deutsche Bank is one of the largest universal banks in the
EU. The company offers a wide range of payment-related APIs. Nevertheless,
currently, they are focused only on informational functions only. Deutsche Bank
APIs are free at the development phase and charged after the launch with startup
and corporate pricing plans.

 Geography: 58 countries (EU, USA etc.)

 Audience: 27 million private and business clients
 Functionality: Deutsche Bank provides developers account information, customer
profile data, customer transaction notifications, and credit card details via the
following APIs
Lloyds Bank APIs: Lloyds, Bank of Scotland and Halifax. Lloyds Bank is one of
the four largest banks in the UK, which operates in both the retail and corporate
sectors. Lloyds Bank owns two large banking brands – Bank of Scotland and
Halifax. Three of these institutions provide the same API offerings:

 Geography: operating in over 58 countries.

 Audience: 21 million clients
 Functionality: Banks provide third parties with account information, allow making
payments, and retrieve ATM and branches locations.
Citi APIs. Citibank is a consumer-oriented division of Citigroup. The bank operates
via 2,700 branches globally. The core service portfolio includes credit cards,
personal loans, mortgages, and commercial loans. Though the bank is widely
established beyond Europe, it actively adopts open banking concept in its
operations. The Citibank APIs have already become an important part of Intuit,
 Qantas, and MoneySmart products. Note that different APIs are available for
different regions.

 Geography: 19 countries (USA, Mexico, UK, China etc.)

 Audience: 200 million customers
 Functionality: Citibank provides developers with authorization features, retrieves
customer cards and customer information, allows money to be moved across
accounts, resets ATM PINs, makes payments for Citi customer reward points, and
grants access to the set of valid values, field properties, and validations applied in
specific countries (It makes the multimarket development of the apps easier).
Nordea APIs. Nordea is one of the largest bank groups in Europe and operates
around 1,400 branches.

 Geography: Nordic and Baltic countries

 Audience: 11 million private customers
 Functionality: The bank APIs retrieve customer account information and allow
initiating payments.
Starling Bank API. Starling is a young, mobile-only bank, established in 2014.

 Geography: the UK
 Audience: 200,000 current accounts
 Functionality: The Starling Bank API retrieves information about cards, accounts,
saving goals, and transactions; allows making payments; and manages joint
accounts etc.
Danske Bank APIs. Danske Bank is one of the major banks in Northern Europe.
The API services are free within the default plan, which is limited to 100 payments
per hour. The institution supports quite a limited set of payment APIs.

 Geography: Northern Europe

 Audience: 5 million customers
 Functionality: Danske Bank APIs allow for managing customer subscriptions,
sending invoices directly to Danske Bank customers, and testing connection and
authentication with Danske Bank services.
 Lending APIs
Banks gradually expand beyond mainstream open APIs, such as payments and
accounts. Lending APIs allow for making express credit scoring, retrieving loan
pricing, applying for a loan, sending files, sharing credit history, making payments
etc. For example, eCommerce platforms can support sales with consumer credit.
Here are several institutions providing such APIs:

Deutsche Bank provides developers with 2

APIs: CustomerSolvency and TransactionCertificate. The former shares a customer’s
credit score, checking the customer’s creditworthiness; the latter retrieves a salary
certificate if approved by the customer.

BBVA offers two lending APIs. The Loan API allows for remote processing for loan
pre-approval. Third parties can get information about a customer’s ability to borrow
money from BBVA. The service is currently available on the Spanish market only.
The Auto Loan API automates applying for an auto loan on the Mexican market.

The onboarding API from Citibank lets third parties integrate account opening
functions with the application products, send applications for screening, submit a
new application for products, provide supporting documents, and check the
application status. Currently, it allows for applying for an unsecured loan via a third-
party application.

Investment and Wealth Management APIs

Large bank groups usually provide a wide range of financial services aiming to be a
one-stop-shop for their customers. As a result, a number of bank groups work on
developing APIs for investment operations.

Saxo APIs. Saxo is a Danish investment bank with a strong focus on internet
trading. Saxo provides third-party developers with access to the functionality of its
own trading platform, which allows for integrating investment features. Currently,
developers can use four APIs to:

 make direct market orders on 20 futures exchanges and over 33 stock exchanges.
 get notification of order creation, order filling, order canceling, margin calls,
etc.connect with third-party software and applications to the Saxo platform to
perform cash transfers, retrieve customer data, and create scope reports.
 automate filing and end of day reporting. For example, the customer can access the
account status (contains Cash Balance, Value-Dated Cash Balance, unrealized P/L,
the value of positions, margins) report via the third-party application.
Deutsche Bank announced an upcoming Investment API, which lets developers
retrieve data about the current performance of a customer’s investment portfolio.

Fintech APIs
The group of APIs provided by fintech companies, which operate on the alternative
market of paуment, lending, credit scoring, etc. A good example of such services is
customer data aggregators. Such companies source data from several banks and
provide it to developers on the basis of the open banking concept. Here are several
examples of such information in the lending domain:

 Formfree
 Salt Edge
 Moneytree
 Marqeta
 Xignite
 Coinbase
The most common financial institution offerings are payment related APIs, which
facilitate initiating payments and receiving basic customer information like account
and profile data. Currently, the widest spectrum of integration options is available
on the European market as EU legislation obligates banks to comply with PSD2.
While Asia and North America lag behind, local players also provide some open
banking options for developers.

Lending and Wealth management APIs are less widespread. There are several
reasons for it:

 such options are not obligatory for banks, according to PSD2

 lending and wealth management are more sophisticated and less frequently used
services than payments
The situation may change dramatically in the foreseeable future as more banks will
add these services to the value proposition. These offerings provide banks with an
opportunity to upscale and significantly enhance distribution. For instance, we
should expect banks to offer consumer loans directly at eCommerce marketplaces
soon.
 Other financial APIs might be a good option for developers who need to retrieve
customer data from a group of banks or integrate with a bank that doesn’t provide
an open API. This way, developers benefit from the one-stop-shopping experience
provided by such consolidators, requiring them to integrate one API instead of ten.

How to choose the right financial APIs for integration

We’ve covered only a few examples of financial APIs available for developers.
According to PSD2, nearly all banks in the EU will have to provide access to
customer data via APIs. The open banking concept is also gaining popularity in Asia
and North America, so the number of providers is growing fast. In addition, fintechs
and non-bank financial institutions have also prepared a number of end-points for
integration with third-party services. Developers have a wide range of options for
integration. How to select the right financial APIs for integration with your software
product? Our team prepared several tips on this topic:

1. Determine the strategic goal of integration: improvement of customer experience,

cross-selling, acquisition of additional customer insights, enhancement of fraud
detection capabilities or something else.
2. Make an audit of your CRM, select the most popular banks among your customers,
then research which banking institutions are most popular among your target
customers. It’ll help you shortlist financial institutions for further research.
3. Evaluate the documentation. Look for elaborate documentation with FAQs. Some of
the open APIs might be paid or have tech limitations, for example, the number of
queries per hour.
4. Check and analyze offerings from each provider in the shortlist. This will tell you if
you can solve the problem by integrating several APIs. For example, if you want to
get a transaction history to optimize your advertisement campaigns, check whether
any shortlisted institutions provide such capabilities.
5. Verify standard and legal compliance. Your developers should confirm the security
standards of the selected API. The legal department should determine whether the
process of data sharing meets the legislative requirements and prepare the process
for getting permissions from the users.
6. Consider several alternative scenarios for implementation. Your research may
show that selected providers don’t have the appropriate API, so you have to
consider alternative APIs or other features for implementation.