The word “bank open API” has been rarely used, but instead recently the word “open banking” has become popular. This is a sign that the API tool has been generally acknowledged by the financial industry, and interest has been shifted to the value and business model it brings. This article introduces NTT DATA’s efforts on open banking.
In Japan, due to the revised Banking Act in 2017, domestic financial institutions are obliged to make efforts in connection with open APIs. In the 2017, Future Investment Strategy set a KPI of introducing open APIs in more than 80 banks by June 2020. If you look at the following trend in the financial industry, only a few of the financial institutions do not support APIs for both personal and corporate services, far exceeding KPI set by the Financial Services Agency. Furthermore, the latest registration status of “Electronic Payment Agents”, another pillar of the revised Banking Act, was 41 companies *1, about the same progress as UK (76 companies) *2 that started the system ahead of Japan.
With open API, a tool that promotes external collaboration, financial institutions are required to remodel their business. The open API utilization model depends on the spread of the eco system built by financial institutions, and hence the business model can be categorized in the following types:
In-house API utilization for cost reduction and speed up (internal API)
Utilization of API, to incorporate external functions for the purpose of strengthening services.
Utilization of API to provide services via external channels.
Utilization of API as a platform to connect both service providers and users.
There is a new open platform business model called “open banking” and it has been attracting attentions in the recent years. In fact, some domestic financial institutions have already begun to make efforts to place the platform business model as a pillar of their strategy and hence they are expected to bring about dynamic changes in the financial services in the future. The new customer experience value that Open banking brings is not limited to the convenient financial services of Fintech companies.
Through cooperation with non-financial businesses, it will now be possible to solve various burdens and problems that arise in customers’ daily lives and life events, and to incorporate the accompanying financial transactions into daily life without stress.
In today’s trend, NTT DATA has been offering the OpenBanking platform named “OpenCanvas” since September 2017.
Although this has already been introduced as an open API management platform for many financial institutions, the following initiatives have recently been implemented to further enhance the platform functions.
Enhanced PaaS/SaaS functions (various authentication services, AI platform, Blockchain platform, Chatbot etc.)
Expansion of API use cases
Secure connection with external public cloud and public/corporate network
Providing opportunities for matching financial institutions/Fintech companies/external operators through regularly held forums.
Active POC implementation
Collaboration with many external companies
NTT DATA will continue to promote new initiatives as a partner that encourages customers to transform into a new business model using IT.