“If each bank offers a distinct API, merchants and fintechs have to adapt to different data structures, workflows and security considerations for each one”
SWIFT, the sprawling global financial transaction messaging network, has published a new API standard that lets a payer’s bank earmark funds in advance of a purchase — guaranteeing payment — as it continues its push to tackle open banking API fragmentation by taking on a role as a global API standards body.
It is SWIFT’s second Open Banking extensions API standard — after its Pay Later API standard released in January — and comes as the global financial industry cooperative builds up a bank of APIs in collaboration with banks, merchants and fintechs. It is available for developer use now, SWIFT said this week.
Integration costs for banks are often triple the purchase costs of the original software, with such costs often making or breaking the business case for deploying new functions, and while the rise in APIs, microservices and containerisation of software have opened up a host of opportunities for banks looking to modernise their infrastructure, they have also come with their own challenges.
As SWIFT noted: “API standards play an important role in open banking because they help speed the rollout of new services while reducing incremental investment.
“If each bank offers a distinct API, merchants and fintechs have to adapt to different data structures, workflows and security considerations for each one – adding complexity, cost and time for implementation.
“SWIFT has long been at the forefront of banking standardisation and is well suited to lend its expertise and experience to this work in APIs.”
The membership-owned organisation has 11,000+ members, with its FIN messaging standard handling some 7.8 billion messages around the world daily.
Hiroshi Kawagoe, of Sumitomo Mitsui Banking Corporation added: “Every country is following the developments of ‘Open Banking’ with great interest, beginning with a regulatory regime designed to catalyse developments.
“We can already see that each country is developing their own formats and that sometimes individual banks are developing their own formats. This kind of fragmentation may not be ideal as the banking industry progressively opens up more advanced services through API. Therefore, there is a need to discuss standards, just as we have achieved with the Legal Entity Identifier (LEI) and in many other areas.”