Hans Tesselaar is Executive Director of The Banking Industry Architecture Network (BIAN), which works with industry to improve banking interoperability. If his 70+ members (including FIS, ING, JP Morgan Chase and Microsoft) represent an Open Banking “orchestra” of moving parts, they have some complex rehearsals ahead, and a missing UK section…
Hans spoke to CBR about the challenges of harmonising APIs, his flurry of new members, and BIAN’s plans for an API Exchange.
Tell us more about BIAN…
We are an independent, member-owned, not-for-profit organization founded ten years ago. Our challenge then was to improve the interoperability of infrastructure that was performing different functions in banks. Things have changed dramatically with the advent of Open Banking/PSD2. We are now working extensively to harmonise standards around the APIs that allow banks to connect their payments and data services to third parties.
Why join you?
It’s a huge effort to design and build your APIs. It’s not something you do overnight. We’re helping our members do it. Integration costs for banks are often triple the purchase costs of the original software. These costs can make or break the business case for deploying new functions or indeed purchasing packages. By working with BIAN, banks can adopt worldwide best practices that make it easier to replace or augment legacy environments. And our members are recognised as front runners in the industry.
What are your current projects?
Our most recent was the publication of our standardised global IT architecture model. This contains definitions for 26 new types of semantic API, for example: “Execute Customer Onboarding” or “Customer Offer for Consumer Loan”. These provide banks and software developers in the broader financial services community with consistent guidelines for creating and implementing APIs into the banking ecosystem. The definitions are all compliant with the SWIFT ISO20022 open banking standardisation approach.
What’s next on your to-do list?
We’ve identified up to 150 APIs and released 26 well-defined API definitions. So there are more to come! But in parallel, we are also working with our members to actually make some of these APIs themselves – not just the definitions – and are working toward setting up an API exchange, which we should be ready to launch in time for the SIBOS conference in Sydney this October.
Who are your members?
We currently have 70-plus members; perhaps 40 percent of whom are banks, 55 percent vendors and then a few academic partners too. Our members include the Commonwealth Bank of Australia, Credit Suisse, Dell Technologies, FIS, ING, JP Morgan Chase, Microsoft, Nomura, Oracle, SWIFT, UBS and many more. The majority are based in Continental Europe, but we have had huge interest from the US recently also. In 2011 we had 15 members. Now it’s over 70, so there is real support for our work.
How about the UK?
For some reason we have a total of zero British members. We’ve had some great conversations with all the major UK actors. They think it’s a great idea. Then… it stops. If you ask me why, I would have to say, simply: “I don’t know!” But the need in the UK for a universally adoptable taxonomy of standard definitions in banking functions is no less great. We’ll keep having the conversations!
Do you think there is still industry reluctance to accept PSD2?
I think there is still a lot of work to do. One of the biggest problems is simply that the regulator was not clear enough with their recommendations. Even in recent months they have been struggling to collect good examples of PSD2-compliant APIs. With the recent Facebook data issues, I think customer concern about data privacy may yet slow the uptake of Open Banking – but there is a huge opportunity here for banks to take advantage of a service-oriented architecture and to start creating a truly open environment.
What are the banking industry’s biggest challenges when it comes to Open Banking?
Many banks have decrepit IT architecture that struggles to support more product offerings and innovation. To straighten out these bank-end challenges, banks need to collaborate with challenger banks, technology experts and fintechs, to define industry-wide standards for banking IT architecture – categorising core IT into clear business functions. If they can align to a framework that is standardised across the whole international banking industry, banks will be able to ensure that their IT systems and thus their APIs are in sync across the landscape. We’re working to make that happen.