Hong Kong launches Open API framework for banks
The central bank hopes that lenders start deploying open APIs within six months.
The Hong Kong Monetary Authority (HKMA) has published the Open Application Programming Interface (API) framework for the banking sector as part of its transition into Smart Banking.
Taking into account international technical standards, the framework lays out how banks should onboard and maintain relationship with third party service providers (TSP).
“Open API is one small step for a bank, but a milestone for financial innovation in the banking sector. We hope that the Framework will provide specific guidance to enable collaboration between banks and TSPs, and ultimately bring new experience of innovative, convenient and safe banking services to customers,” Norman Chan, chief executive of the HKMA said in a statement.
With the release of the framework, HKMA expects banks to be able to deploy Phase I Open APIs within six months and Phase II Open APIs within 12 to 15 months.
The launch of the framework may just provide the necessary rankings boost for Hong Kong who lost to Singapore in open banking readiness based on a report released by the International Data Corporation last May. The report observes that although Hong Kong has a ‘supportive fintech/FTT ecosystem’, it lacks clear guidelines in open API implementation.
Open banking leverages on the use of APIs to share data banks have on customers with third party players for various reasons including monetising the data or reducing overhead costs.Proponents of open banking argue that making data available could significantly boost the efficiency of the financial system and enhance customer choices.
Furthermore, instead of building technology from scratch, banks need to only forge partnerships with fintechs or external partners who already have the expertise to provide a product or service offering from the data that is otherwise gathering dust.
To set an example for the financial services industry, the HKMA will launch an Open API on its official website where around 130 information sets will be made available via the technology including exchange rates, interest rates, Exchange Fund and Coin Cart schedule.