The State of Open Banking in Switzerland
The second Open Banking Summit in Switzerland took place at the end of August – a good opportunity to take another look at what is currently happening in the Swiss open banking scene. Compared to the situation a year ago[1], there are some great developments in the direction of open banking.
It is particularly satisfactory that the Swiss NextGen API adapted by OpenBankingProject.ch has been in productive use at Berner Kantonalbank since August and forms the basis for further use cases for BEKB[2]. In addition, this PSD2 API adapted for Switzerland has already been available for the more than 100 Finnova banks since April 2021 and can accordingly be used quickly for the implementation of concrete use cases[3].
Since the end of 2020, with the publication of the strategy paper “Leading worldwide, rooted in Switzerland: Policy for a future-proof Swiss financial centre” by the State Secretariat for International Finance (SIF), the Swiss government has been taking a clear stance and calling for banks to open up by means of standards and internationally compatible framework conditions. Nicolas Brügger, Senior Policy Advisor at SIF, has advocated this with great enthusiasm at a number of events, including the Open Banking Summit. They are keeping a watchful eye on developments and will initiate further measures if necessary.
There is also a lot of energy behind other projects. SIX, with its open banking platform bLink, has announced collaboration with Swisscom and Inventx to provide technical access to its offering for customers of the Swisscom Open Business Hub and the Inventx Open Finance platform. In addition, SIX is participating in the development of API standards for global wealth management as part of the OpenWealth Association and has already announced the integration of three of the APIs into the bLink platform this year.
On the part of the industry associations, the Swiss Bankers Association and Swiss Fintech Innovations are also actively engaged in representing the interests of the banks in a coordinating capacity. For a few weeks now, the former has also been taking an active part in the decision-making body of the Berlin Group, which is developing open banking APIs that can be used internationally. This is an important step, because without international interoperability and consideration of widely used standards, especially also for basic services (account information, payment initiation), the effective implementation of open banking in Switzerland will become more expensive due to the costs of specifying own standards and the development and maintenance of the respective software and thus become unattractive for innovative third-party providers and ultimately also the banks and customers[4].
This movement towards internationality is also interesting against the background that there are several API specifications in Switzerland alone, and recently the question has increasingly been asked: How many of them does Switzerland need and which one will prevail? This question is actually aimed in the wrong direction, at least if you reduce it to a comparison of the two API specifications bLink Corporate API and the Swiss NextGen API. The issue here is not so much the API specifications themselves, but rather different operating models. The bLink API specification was developed specifically for this platform and can only be used in this context. The Swiss NextGen API is an adapted version of the Berlin Group’s NextGenPSD2 API available to all interested Swiss financial institutions and can be used in hybrid and decentralized models.
And what are the banks doing? From our exchange with them, we see that more and more banks are taking up the topic of open banking, participating in initiatives and incorporating their findings into their strategic considerations. Together, OpenBankingProject.ch is currently creating concrete building blocks for open banking in Switzerland in two areas in particular:
- Customer onboarding and KYC: Creation of a uniform trust framework and harmonization of data sets, processes and technical interfaces to increase efficiency in the identification and management of the contracting party.
- Open Banking Network: Outlining an implementation scenario for the efficient and sustainable connection of banks and third-party providers within the framework of a hybrid model, analogous to the very successful setup in the UK
The bottom line is that we cannot yet speak of a breakthrough, but a certain momentum is noticeable. This is absolutely necessary if the Swiss banks want to continue to adequately support and accompany their customers. A brief look at the history books makes it clear how quickly change is currently taking place, especially at the customer interface. Thousands of years have passed between the classic bank counter and the first ATM on Bahnhofstrasse in Zurich in 1967. It took around 30 years from this to online banking, and a good 13 years from then to mobile banking. A next step will be the so-called “embedded banking”, which is described in detail in this article. Open banking is an essential building block for the banks, and it is well worth actively addressing it now.
[1] see https://ccecosystems.news/open-banking-summit-2020-chancen-und-umsetzungsszenarien-fuer-open-banking-in-der-schweiz/
[2] https://www.bekb.ch/die-bekb/publikationen/medienmitteilungen/2021/20210125-open-banking
[3] https://www.finnova.com/files/finnova_template/files/news/210423_MM_Finnova_Open_Banking_aaS_de.pdf
[4] see https://www.moneytoday.ch/news/wie-die-schweiz-die-besten-api-standards-bauen-kann
