Is implementing a Open Banking Application Programming Interface (API) difficult?

Technically, no but the technology of the Application Programming Interface (<a href="/glossarycollection/application-programming-interface" style="color:#48277C;" target="_blank" title="Application Programming Interface"><u>API</u></a>) development is the easy part. Implementing the Regulatory Technical Standards (<a href="/glossarycollection/regulatory-technical-standards" style="color:#48277C;" target="_blank" title="Regulatory Technical Standards"><u>RTS</u></a>) is a major challenge for any bank as it involves interpretation of a piece of legislation (the RTS) that has been deliberately designed by the European Banking Authority (<a href="/glossarycollection/european-banking-authority" style="color:#48277C;" target="_blank" title="European Banking Authority"><u>EBA</u></a>) to be technology agnostic and to allow flexibility of interpretation.<br/><br/>

Another challenge is for legacy banks that have batch-oriented core banking platforms, in this scenario, the challenge is the timeliness of the data and ensuring that the data presented to Third-Party Providers (<a href="/glossarycollection/third-party-provider" style="color:#48277C;" target="_blank" title="Third-Party Provider"><u>TPP</u></a>) for consumption is as recent / fresh as the data that TPPs own internet banking interface. TPPs need to be updated on the status of transactions and this implies a near real-time capability is required for the interface.<br/><br/>

In the EU and the UK, as well as developing a primary set of Open Banking interfaces, Account Servicing Payment Services Providers (<a href="/glossarycollection/account-servicing-payment-service-provider" style="color:#48277C;" target="_blank" title="Account Servicing Payment Services Provider"><u>ASPSP</u></a>) are also required to create a 'fallback' interface for the event of a failure or performance problem with their primary interface. In order to avoid the building of this interface, the ASPSP must request an exemption mechanism but the conditions for a fallback exemption are difficult to achieve and contain a number of 'Catch-22' type challenges.<br/><br/>

One of the key reasons for recommending working with a third-party to implement an Open Banking interface is that often a third-party will have implemented their interface with an existing bank and this will have addressed a number of the challenges that ASPSPS face in proving the usability, performance and alignment of their interface.