APIdays 2016: Open Banking and PSD2 regulation

XMLdation attended the APIdays conference in London on October 11th and 12th (see the event). The APIdays series of conferences started in 2012 in Paris, and has spread to 7 countries. The London event, held at Level 39 in Canary Wharf, focuses on API and banking. As you would expect, many of the speakers and attendees at this year’s event were concerned with Open Banking and PSD2 regulation.

Some of the interesting points made around PSD2 were:

–      The PSD2 directive is not so prescriptive, and doesn’t mandate the use of RESTful APIs, but that is the natural technical choice;

–      Some banks are very well-prepared for PSD2 compliance at a technical level, and it is expected that banks generally will be compliant by the 2018 deadline;

–      It is not so clear that compliance will mean something useful in the marketplace within that timeframe, or that the banks have reached an understanding of how to approach the ‘business of APIs’;

–     There is a sense that the regulators, in this case, are ahead of the market;

–     Because the PSD2 directive is not so prescriptive, the European banking industry is watching the UK initiative around open banking carefully;

–     The CMA (competition and markets authority) in the UK has adopted a strong stance around open banking (see more), taking measures to ensure that customers benefit from technological advances and that new entrants and smaller providers are able to compete more fairly; one of these measures is to define technical standards for APIs.

While it was clear that PSD2 is focusing bank attention on APIs, there is growing awareness that the banks need to be engaged in the world of APIs for a lot more than regulatory reasons. Banks are becoming more open to the idea of cooperating with 3rd parties to deliver apps and services in order to provide more targeted customer experience. This involves working with an ecosystem of developers who consume bank APIs to create great apps. These developers have their own expectations around “developer experience” and engaging with banks in a 24/7 online self-service fashion.

Moreover, banks themselves can benefit from becoming consumers of APIs. For example, Mike Kennelly from PwC talked about the cost benefits of consuming APIs for services such as KYC, replacing bank internal systems that are expensive to maintain.

Thanks to the organisers of the event for creating a banking-focused event on APIs.

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