September 2019 is a date that looms large for European financial institutions. From that month they will be obliged, under the revised Payment Services Directive (PSD2), to give third-party payment providers (TPPs) access to their client accounts (with the express consent of the client). PSD2, alongside the UK’s Open Banking, is driving the uptake of open application programming interfaces (APIs), which are seen as the most secure and effective way to provide access to accounts. In the cash management world, this move to open APIs could herald the delivery of services that streamline and reduce the cost of payments and improve risk controls.
While open APIs are not new, they are relatively uncommon in the financial services world and in particular the commercial banking sector. One of the main drivers of APIs in commercial banking is the move away from the ‘walled garden’ of the bank ‘black box’ interface towards an open banking system, according to Thomas Nielsen, chief digital officer at Deutsche Bank.
