If you haven’t heard about the Open Bank Project (OBP), then you haven’t been paying attention to the open bank API standard discussion that’s center stage in the UK or the with the PSD2. The UK government is already setting out plans to go further through an open API standard in UK banking. The whole point of the standardization is to allow the development of secure third-party apps compatible with all UK bank systems. The same call for standardization came from the PSD2.
The Open Bank Project Hypothesis: Banks true role will change from software producers to software gatekeepers – Ismail Chaib, COO at TESOBE / Open Bank Project
The Open Bank Project exposes transaction data in a simple and consistent structure
The Open Bank Project (OBP), alongside others in a working group, took part in the open standard API consultation and sat on one of the committees that wrote recommendations to the UK government to further pursue an open bank API standard for UK banks. In a nutshell, the Open Bank Project API exposes transaction data and other banking resources in a simple and consistent structure by abstracting away the peculiarities of each banking system. This enables application developers to write an app once, and use it for multiple banks.
The Open Bank Project and Bank Innovation recently concluded a survey to better understand how banks worldwide are prioritizing API initiatives and why. The intention was to uncover the drivers behind the banking industry’s current API practices. With this in mind, all that’s needed is enough momentum to make the Open API initiative a truly global initiative supported by a majority of the banks globally.
I got a chance to throw a few questions at Ismail Chaib who is currently the COO at TESOBE, the company behind the Open Bank Project.
[Kevin] So how did the whole project come about?
[Ismail] The idea started with the need to stump out corruption and increase transparency in financial transactions. The original Open Bank Project idea was a bank where all accounts are open to see. For instance, a company can open up data internally or to shareholders, a charity can open her accounts to her donors, or individuals could give read only access to their accountant or another bank if they want to get a loan.
In order to make this technically possible, we developed an open source API that allows banks to make these applications available to its customers at low cost to the bank. An API (application programming interface) is a technical layer that sits on top of any bank allowing the applications to securely interact with the bank. It is very secure because when using these applications you always log into the bank directly.
[Kevin] How are you guys connecting with the banks?
[Ismail] We’ve been able and continue to build great relationships with banks by allowing them to help with the development. That as you are aware is our philosophy, and the principle idea behind Open Bank. Their internal teams, we or our partners can extend the Open Bank Project API as the banks wish. It is really a sustainable technology they can rely on in the future. This is why major banks are starting to get excited about this whole project. The four things that are driving this push are:
- Changing customer behavior
- Non-banking competitors (Fintech)
- Aging Legacy systems
- Upcoming regulation (the open bank API standards initiative in the UK and the PSD2)
[Kevin] How are you maintaining the code?
[Ismail] At the moment our internal developers are busy handling that. However, as you know, we are an open source project. We do get input from time to time from external developers. We actually encourage that because that is the whole point of an open system.
[Kevin] Are you guys only currently supporting OAuth1?
[Ismail] Yes. For us it the most effective because the developers (both internal and external) seem to prefer it and it’s more secure.
[Kevin] What’s one thing you would tell new startups striving to develop a banking product?
[Ismail] The whole goal of the Open Bank Project is to give developers the tools necessary to help them develop. Rather than start from scratch. With the Open Bank Project API’s easy-to-use RESTful JSON you not only get to use secure authentication via OAuth implementation, but you also gain attention though our App Store. For developers a single unified banking API is key. Developers do not want to have to integrate a completely different API in order to support all of their users.
[Kevin] Ismail, thanks for taking the time for a chat. Looking forward to the next chat.
[Ismail] You are welcome.
A developer could build a Spanish app that connects to UK banks as well as, say, Mexican banks. It’s about an open standard giving rise to more choice and utility for banking customers because developers find it easy to use internet standards such as REST and OAuth, and if it’s easy to deploy to multiple banks, developers are more likely to develop for specialist markets – Simon Redfern, CEO at TESOBE / Open Bank Project
Are you looking to launch a startup? Or do you know someone who already has? I would love to get your take on the implications of the Open Bank Project API on the future of banking.