The open API movement gains traction

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As PSD2 legislation looms in Europe, and Open Banking is due to be introduced by 2018 in the UK, the creation and use of open APIs is becoming less of a choice and more of a necessity for legacy banks.

APIs provide simple connections between systems, while open APIs establish connections between two parties. Some banks view open APIs as a threat because they enable third parties to access their data and systems, but others see them as an opportunity to connect to fintechs in order to offer their own customers enhanced products and services. That’s presenting an opportunity for third-party firms with services that help banks make these connections more easily.

Monitise and Virtusa Polaris are the two latest firms to seize this opportunity:

  • Monitise on Wednesday announced the launch of the FINKit Partner Program, a platform and toolkit that allows banks to leverage the technology and solutions of a range of fintechs and payments providers, including MasterCard, Experian, and Yodlee. Banks need only connect once to the FINKit platform in order to access functionalities of multiple providers, including digital wallet solutions and payments security, which they can then deliver to their own customers via their proprietary digital services.
  • Virtusa Polaris on Wednesday launched its OpenBank API Accelerator, a cloud-based platform that helps banks integrate with third parties and leverage their services for their own clients. The Accelerator has three main components: Fintech Connect, 50 “innovative fintechs” banks can connect to; Core Connect, adapters that help APIs connect to banks’ core systems; and BIAN Compliant MicroServices Blueprint, a product for lending, payments, and wealth management. Virtusa Polaris said more features will be added down the line.

We expect to see more of these products in the near future. Such services enable incumbent banks to build and launch products more quickly, and probably more easily, than they have historically been able to. Banks will also likely find it attractive that these services require minimal connection effort on their part and offer access to multiple third parties. Fintechs, meanwhile, will benefit by gaining access to incumbent institutions’ large customer bases.

Financial services companies are struggling to keep up with a mountain of new regulatory and reporting requirements — and it’s only going to get worse.

From the 2008 financial crisis through 2015, the annual volume of regulatory publications, changes, and announcements increased a staggering 492%. That’s creating an opportunity for a swath of new companies called regtechs. Regtechs are companies that use technology to help firms decrease their regulatory burden.

Sarah Kocianski, senior research analyst for BI Intelligence, Business Insider’s premium research service, has compiled a detailed report on regtech that explains what’s driving the regtech trend and where the biggest opportunity lies. It also provides examples that show how regtechs are providing solutions to compliance problems.

Here are some of the key takeaways:

  • Regtechs can help in many areas of compliance. This goes beyond automating legacy processes and can include interpreting legislation, designing new compliance processes, and managing and processing data.
  • Large financial firms represent the biggest opportunity for regtechs, but they’re also well suited to help fintech startups.
  • Regtechs face a number of hurdles to achieving significant scale and success. These include competition in the industry, the challenges of international growth, and building trust with customers.
  • Implementation of regtech solutions will result in staff reduction. These technologies will augment compliance teams in the short term, but could lead to job losses among compliance professionals in the longer term.

In full, the report:

  • Defines what regtech is and the problems regtechs are trying to solve.
  • Highlights the advantages regtechs have over legacy compliance solutions.
  • Provides regtech company case studies.
  • Details the outlook for regtechs globally and the impact they will have on compliance teams.

Interested in getting the full report? Here are two ways to access it:

  1. Subscribe to an All-Access pass to BI Intelligence and gain immediate access to this report and over 100 other expertly researched reports. As an added bonus, you’ll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> START A MEMBERSHIP
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