New technology and innovations are pushing the payments industry forward, making transactions speedier and safer than they were before. But the emergence of new tech in the financial services market is also inviting new challenges, especially as older and newer FIs compete for the same customers.
Among the key challenges faced by both newer and more established players is getting all parties to speak a common language and quickly adapt to new rules. While some financial institutions are turning to APIs as a way to help different financial institutions transmit data and communicate more efficiently and also protect their own data, others are promoting the ISO 20022 standard as a common language for different FIs.
Inside the new Smarter Payments Tracker™, PYMNTS explores the latest interoperability developments that are helping banks and FinTechs open up new lines of communication and speak a common language.
Around the Smarter Payments World
Connected customers want to be able to perform a variety of financial tasks, such as paying bills or transferring funds to a friend at a different bank. But sometimes traditional banks do not offer the features their customers expect. Recognizing the need to rise to customer expectations, many FIs around the globe are turning to APIs to promote greater interoperability.
In Sweden, for example, the FinTech Tink recently launched its own API designed to enable banks in the Nordic region to share data more easily. The company’s API works to provide a single point of access for data, rather than requiring banks in the region to establish separate connections using an individual bank's API.
Meanwhile, tech giant Oracle recently launched its own suite of over 1,500 APIs, thanks to a recent hackathon.
Oracle Financial Services partnered with Oracle Startup Cloud Accelerator and Scaleup Ecosystem to host the hackathon, which saw participation from 13 companies. The participants used Oracle’s open banking API to develop a new series of API solutions that can be used for artificial intelligence, identity verification, credit scoring and other functions.
Elsewhere, many banks and FinTechs are taking their own leaps into the open banking space, including U.K. mobile-only bank Yolt. The FI recently completed its open banking integration with RBS Group, one of the nine largest banks in Great Britain and Northern Ireland. The integration is aimed at allowing users to compare different financial products and track spending services from a centralized app.
Deep Dive: Open Banking
The U.K.’s open banking initiative is intended to foster greater competition in the financial services space, while making it easier and safer for FIs to share consumer data. But open banking also presents challenges for financial institutions, including concerns about cyberattacks and obligations to protect consumer data.
In this month’s Smarter Payments Deep Dive, PYMNTS looks at the rise of the open banking movement and how it could reach other global markets.
NACHA Aims to Give Banks a Standard Language
As FIs realize they must engage with each other for different business purposes, one of the key challenges they face is learning to speak a common language. George Throckmorton, managing director of the Advanced Payments Solutions Group at NACHA, the Electronic Payments Association, says standardization is the key to getting different financial services companies on the same page and realizing greater interoperability opportunities.
For the May Smarter Payments Tracker feature story, PYMNTS spoke with Throckmorton about the challenges standing in the way of standardization, and the benefits a shared language could offer the financial services sector.
To read the feature story, the deep dive and the latest news, download the Smarter Payments Tracker™.
About the Tracker™
The Smarter Payments Tracker™, powered by FIS, is a bimonthly report that looks at how payment systems are evolving to be become faster, transmit data, offer interoperability between systems and more to improve the payer and payee experience.