Open finance: industry associations draw up fundamentals for an open financial centre
Changing customer needs, new stakeholders and innovative technologies are posing challenges for traditional financial institutions. Against this backdrop, open finance will have a lasting and transformative impact on the banking sector. Cross-bank liquidity planning, custody data aggregation and bancassurance, for example, are steadily gaining importance. In a world where the value chain is becoming increasingly fragmented, with customers being served by a large number of different financial service providers such as banks, insurers, fintech and insurtech firms, and service providers from other industries, it is no longer a question of whether open finance will establish itself, but in what form.
The SBA believes that it is vital to preserve the banks’ freedom of contract and to ensure that market participants can decide for themselves who their partners should be, with the focus always on customers’ needs.
However, a market-driven approach requires a shared understanding of the legal framework and coordination across the industry regarding central business and technical issues. Conditions must be put in place that are geared to enabling banks to work with each other and with third parties as simply and securely as possible. The SBA is in favour of clarifying any legal and security issues that remain unresolved in this respect. It is also important to ensure that the technical principles do not allow for too much variation, especially as regards the standardisation of application programming interfaces (APIs) and security recommendations. A certain amount of uniformity in these areas will favour the safe and rapid scalability of promising business models.
To this end, the SBA and SFTI have worked with all the relevant financial centre stakeholders to agree on the roles each will play in future cooperation on open finance, particularly in terms of API standardisation. SFTI is acting as a central forum, drawing up the necessary business and technical principles and recommendations for open finance in Switzerland in conjunction with the leading national and international stakeholder groups and partner organisations. Its working group is broad-based, bringing together representatives of banks and insurers as well as fintech and technology firms. The SBA, for its part, is assuming a coordinating role in conveying the industry’s concerns to politicians, authorities and the general public, which it can do in a targeted and effective manner thanks to the clear allocation of roles.
The first draft of a general overview was presented to authority and industry representatives attending the open finance roundtable on 23 December 2020. Federal Councillor Ueli Maurer, head of the Federal Department of Finance, had invited a wide range of key players in the Swiss financial centre to take part in active and open discussions. Building on this, future dialogue between the SBA, SFTI and the authorities on the topic of Open Finance will be further strengthened.
The SBA and SFTI have a history of working well together and intend to deepen this relationship continually going forward. The two associations signed a Memorandum of Understanding back in 2018 declaring their intention to work together in shaping the frameworks for digital innovation in the Swiss financial centre and ensuring that their members enjoy the freedom they need to develop new approaches. The very clear division of roles in terms of collaboration on open finance, with all relevant stakeholder groups included, is another successful outcome of this link-up.