Malaysia takes step forward to realise open banking ambitions

The central bank is inviting industry feedback for open data API specifications.

Malaysia’s central bank has launched a public consultation on open data usage for financial institutions as laid out in the policy document entitled Exposure Draft on Publishing Open Data using Open Application Programming Interface (API).

The document by Bank Negara Malaysia (BNM) encourages financial institutions (FIs) to adopt open data API specifications on select product information like credit cards, SME loans and motor insurance products developed by implementation groups to ensure standardised open data API roll-out.

Also read: Lack of regulatory clarity in open banking slows down ASEAN banks

Banks, Islamic banks, insurers and takaful operators are encouraged to adopt the Representational State Transfer (REST) communication protocol/principles and JavaScript Object Notation (JSON) data format and facilitate conversion from alternative protocols and data formats to REST and JSON respectively to meet API architecture standards.

FIs should also take into account data and security standards and third party governance processes. They are invited to give feedback and suggestions until September 28 for open data API specifications that will allow third party developers to access data without the need to set up a business relationship with the open API publisher.

“The [central] bank recognises the benefits of Open API standardisation initiatives to the industry at large, including improving third party experience in accessing Open APIs published by different providers,” Bank Negara Malaysia (BNM) said in a statement, adding that this would result in efficiency gains for both customers and businesses and slash time-to-market.

BNM has also undertaken measures to encourage wider adoption of open API in the payments scene after finalising the Interoperable Credit Transfer Framework in March to encourage the publishing of open APIs to facilitate credit transfers.

Malaysia ranks behind Singapore and Australia in an open banking readiness index published by International Data Corporation as it cited the ‘lack of regulatory frameworks’ and ‘low security preparedness’ hampering open banking adoption in the country.

"At this point in 2018, Open Banking adoption will be prodded on by regulators who are themselves competing to be the most proactive regulator in the region,” Michael Araneta, IDC AVP for financial insights Asia/Pacific said in an earlier statement. 

Photo from CEphoto, Uwe Aranas, CC BY-SA 3.0