Open banking in Switzerland: between hype and reality
Focusing on the customer
First and foremost, open banking reflects the ambition to make financial services even simpler, faster and more reliable for customers. Behind the concept lies the vision of sharing (financial) data in an ecosystem comprising a range of players: banks, insurers, fintech companies and many others. Examples include executing and booking payments to an account in real time, aggregating assets spread across different bank accounts into a single e-banking dashboard and comparing and concluding mortgages with the best conditions for the family home directly on a real estate platform. Meanwhile, corporate customers such as SMEs, can improve their liquidity planning by integrating accounting software with their e-banking platforms. In any case, the focus lies on customers and their data, which customers control at all times.
SBA overview provides a basis for further discussions
The Swiss financial centre finds itself at the epicentre of this creative tumult – between the hype and the productive applications linked to open banking. Clarity is essential, and so the SBA has come together in a working group with various bank representatives to compile an overview detailing the current developments and challenges surrounding the implementation of open banking in Switzerland. It’s a small but vital piece within the bigger picture. Fully reflecting the market-driven implementation of open banking in Switzerland, it’s intended to support the dialogue across the financial centre and has therefore been discussed with selected industry experts and the authorities.
One goal – many paths
The advantages of open banking are obvious and unanimously agreed upon. The question is not so much as to “what” but as to “how” – and that’s where opinions start to differ. The hype surrounding open banking has been significantly fuelled by the regulations on data sharing in the EU and other financial centres, such as Brazil, Singapore and Hong Kong. As Switzerland shows, however, there are other ways of going about it.
Switzerland is adopting a market-driven approach
Switzerland’s approach is more liberal. The country currently has no specific regulatory requirements obliging banks to share bank data. Essentially, they are free to decide for themselves who they work with and who is allowed access to their interfaces – always with the customer’s consent, naturally. This ensures that the collaboration between bank and third-party providers is based on market considerations and specific use cases.
First solutions are being realised
The existing approach works well. The first platforms and marketplaces developing innovative solutions based on open or proprietary APIs are now being implemented. One example is SIX’s b.Link platform. At the same time, some banks are working to develop standardised APIs for specific business domains. This can be illustrated by the example of St. Galler Kantonalbank. which is looking to better connect its custodian bank services with external asset managers in its wealth management operations. Similarly, Hypothekarbank Lenzburg is pursuing its own strategy, as another example.
Various initiatives working towards uniform standards
With the growing number of different offerings, there are increasing calls for a uniform API standard for the Swiss financial centre. This is a welcome development, since heterogeneity generally leads to complexity and higher costs. Thus, initiatives such as SFTI’s Common API and openbankingproject.ch, are in the process of defining uniform and open standards in areas such as payment services, lending and pensions and encouraging their wider application. The interests are clear: Third party providers want standards that are as uniform and open as possible so that they can connect with as many banks as possible using the same plug, without needing an adapter. Banks, on the other hand, want to optimise their resources when adapting their existing systems with their own interfaces.
Recognizing which way the wind is blowing
Time will tell whether the open banking vision can be implemented to the desired degree. Customers will have a major say in the future of open banking in Switzerland. One thing is clear: regardless of the success or failure of today’s initiatives and platforms, BigTech companies from the US and China will continue to shape customer expectations and move swiftly to serve unmet customer needs. The Swiss financial centre is therefore well advised to engage with the strategic dimensions of open banking and ecosystems before others do. The SBA’s analysis offers an initial foundation for doing just that.