The banking sector looks to be heating up as two more banks have launched API initiatives this week. Spanish bank BBVA has released the alpha version of its US API market which features four APIs. Meanwhile, German private bank Sutor Bank has released a new set of APIs that makes their services available to companies such as Fintech startups. These announcements come on the heels of Capital One recently opening their first open banking Platform in the US.
The BBVA API_Market currently features the following APIs:
- PayStats: aggregated data of BBVA cards purchases meantfor for business intelligence use.
- Connect: Enables BBVA clients to give an app consent to access BBVA services in their name.
- Accounts: Allows pre-authorized users to access key account data for enhanced financial management services.
- Cards: Allows Integration of a users’ pre-authorized bank card data.
BBVA has been pointing in the direction of opening its data via API for some time. In 2014, it ran a series of hackathons where the bank made certain spending data sets available by API. BBVA released the API management platform APIversity and has also been blogging about APIs and how fintech startups can make use of them since last summer.
Sutor Bank is also jumping on the growing trend by opening its APIs. The APIs are aimed at digital businesses such as fintech startups, marketplaces and platform companies. Partners will now have access to Sutor Bank’s core banking system including banking processes such as investing, lending and payments.
According to Sutor Bank’s owner and managing director Robert Freitag, “With the new APIs Sutor Bank is becoming a one stop shop for all digital businesses...In the future, firms will receive all banking services from Sutor Bank as their single source, allowing them to provide these services to their own customers.”
Sutor Bank and software provider PASS are working together to develop the platform. Sutor Bank developed the investment platform API in-house while PASS developed the API for the core banking system.
Do Banks Fear Open Platforms?
Mark Boyd previously explored the question why banks are hesitant to fully embrace open platforms. A number of banks have begin to innovate but the appetite for APIs has mostly extended to in-house initiatives. According to a study cited by Boyd, "the majority of banks recognize that an open banking platform is the endgame for the industry, most had not been able to build internal support for such an approach as yet."
However none of this is a guarantee that the banking industry is ready to jump into the open platform pool with both feet. According to Stevie Graham, founder of banking API startup Teller
"If you look at who is represented in that working group, it's pretty much the incumbent banks. There's a few from challenger banks. Banks are an oligopoly – the rational thing for them to do is not to innovate. I feel they will subvert the process. There are so many people involved, so many reasons to stop things happening. Banks will subvert the User Experience to stop people using APIs. They could plausibly make the security argument. Security people tend to say, you can't do that, and work from there."
Graham goes on further to say, "If you (third parties) focus on building the best possible experience, and own that channel, completely abstracting the banks into dumb pipes, then it doesn't matter where your current account is. You can switch behind the scenes." Banks would understandably be loathe to give up any touchpoints with their customers. Combine that with security concerns around such sensitive data and the highly regulated nature of the industry and you can start to see why innovation has come so slowly. But come it will and APIs may very well play an important role so it bears watching how early adopters such as Capital One and BBVA deal with the challenges ahead.