Several of the U.S.’s largest banks are releasing APIs to allow third-party developers to build applications around them, according to an article by Penny Crosman for American Banker. The move is sure to encourage other banks to follow suit.
Citigroup, BBVA Compass, Bank of America and Capital One have all made aspects of their internal, proprietary software available to outsiders. The idea is to encourage innovation around an industry that is seeking to keep up with digital trends to remain relevant in a mobile-first world.
While exposing APIs has become standard for many industries, banking has been slow to adopt the open-source ideal, but that hesitation looks like it may be coming to an end. "It's like breaking a few windows to let free air and light in…It ends up benefiting fintech as a space," said Citi’s global head of emerging platforms and services Andres Wolberg-Stok.
Citi had already been using APIs internally to integrate different systems and channels, and so making an API publically available was a natural extension of that. The company realised that the ideas generated by external developers eventually make their way into the organisation to the benefit of everyone. The move is in line with Silicon Valley Bank’s use of the OFX (Open Financial Exchange) standard that lets its tech company clients access products via digital tools.
APIs have changed the way companies interact with each other. And now open banking APIs may change the way people interact with their finances as banks undergo their digital transformation.