Financiers are not happy with openness – Newspaper Kommersant No. 208 (7409) of 11/10/2022

The Central Bank has published the concept of introducing open APIs in the financial market. Although the idea has been wandering in the heads of the regulator’s leadership for quite a long time, its meaning is far from clear to every layman, for whose benefit it is intended to work.

In fact, everything is simple. Open APIs are software interfaces published by organizations in accordance with the requirements of the Central Bank to enable digital data exchange with service providers (with the consent of the client). In the application to finance, this model involves the receipt by providers of banking, payment, insurance, investment, pension and other services of data about the client of third-party players, as well as the implementation of operations on his behalf. The point is in the open exchange of client data.

The idea is somewhat similar to the Unified Biometric System (UBS), which was “one of the strategic tasks of the Central Bank”, but never took off, despite forcing banks to participate in it. Only open APIs are a more advanced level, you don’t need to collect data into a single system, you just need to open your own.

From the point of view of the Central Bank, the introduction of the approach will ensure the development of competition in the market, but from the position of large players, it will simply give small competitors access to their customers. The first steps have already been taken in this direction, in 2020-2021 the Central Bank published recommendatory standards for the banking sector, and even a pilot project was implemented with 13 banks to exchange information about the location and working hours of offices, ATMs, and so on using open APIs. The banks shared this already public data, but it didn’t get to customer information.

According to the current plans of the Central Bank, until the end of 2024, the use of open APIs will be advisory in nature, and then “their use for a number of operations for the largest organizations will become mandatory.” In other words, large banks that have built ecosystems so that their companies have access to each other’s customer data will have to open information to competitors from the beginning of 2025.

The new concept outlines two approaches for introducing open APIs: the first one is only for financial institutions, the second one is for non-financial ones too. The second is more useful and efficient, the paper says. There was a similar fork in the choice of the EBS development path. Then the Central Bank decided to limit itself to banks – and the project failed.

Now, it seems, the regulator is stepping on the same rake, preferring to experiment with financiers, without thinking that participation in the project would be useful for them too. Well, the bankers have at least another two full years to successfully shelve these good intentions.