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  • user 3:35 pm on April 3, 2018 Permalink | Reply
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    A summary of the new Open API framework in Hong Kong, and how it compares with PSD2 

    Today, Banking is gaining traction globally, through a combination of ’ internal efforts, market initiatives, and regulations like the EU’s and the UK’s CMA Open Banking. Now has also gotten on board, with the Hong Kong Monetary Authority (HKMA)’s launch of its draft Open API .

    Publication of the framework on January 11, 2018 marked the start of a public consultation that will run until March 15, 2018. Responses will feed into a final version that will be binding for the territory’s largest retail banks, although other banks will be able to join in the future.

    So, what are the highlights of the HKMA’s Open API framework? It includes the following goals:

    • Increase the competitiveness of Hong Kong’s banking sector.
    • Generate opportunities to reach out to untapped markets through better customer experience.
    • Define Open API use cases and deployment timeframes.
    • Recommend Open API technical standards.
    • Recommend Open API facilitation measures.

    One of the most interesting aspects of the HKMA’s framework is the splitting of use cases into four phases with different product categories and timelines:

    Phase 1

    Product and Service Information: Third-Party Providers (TPP)’s access to banks’ products information, which is frequently used by customers on a ‘read-only’ basis and thus helping financial product comparison sites. Banks will be expected to implement these APIs within six months of the framework’s finalization.

    Phase 2

    Customer Acquisition/New Applications: Customer acquisition via TPPs and through online applications for credit cards, loans and some insurance products. Banks will be expected to implement this within twelve months of finalization.

    Phase 3

    Account Information: Retrieval of both stand-alone and aggregated account information. It would help TPP services that aggregate multiple accounts or perform analytics to gain customer insights. The timeline for this phase will be discussed later between HKMA and the banks.

    Phase 4

    Transaction Processing: Enabling TPPs to communicate customers&; payment instructions to banks. Again, the timeline will be discussed later between HKMA and the banks.

    Comparing the HKMA’s framework with the Regulatory Technical Standards (RTS) for strong customer authentication (SCA) under PSD2, one of the biggest differences is that the HKMA’s draft is a mixture of a regulatory paper with some initial timelines, recommendations on specific protocols and data formats, and high-level specifications for each product category. PSD2 is -agnostic and does not define any API standards, with other initiatives like Berlin Group and STET stepping in to fill this gap.

    Other differences between HKMA and PSD2:

    Click to view larger

    While HKMA Open API was inspired by Open Banking and PSD2, its approach is visionary—and in many ways, unique. It remains clear that a single API standard is vital for any economy to attract global innovation and avoid fragmentation. This is a lesson that HKMA is well-placed to take on board.

    Click to view larger
    *6 months (Phase 1) and 12 months (Phase 2) after release of the Open API
    **To be reviewed by HKMA and banks for a Phase 3 and 4 timeline


    My thanks to Hakan Eroglu for his research and analysis for this blog.


    The post A summary of the new Open API framework in Hong Kong, and how it compares with PSD2 appeared first on Accenture Banking Blog.

    Accenture Banking Blog

  • user 10:01 am on July 16, 2016 Permalink | Reply
    Tags: , , , summary, ,   

    Fintech and blockchain developments for the week of 4 July 2016: What you may have missed 

    Big bank comeback in mobile payments: Payment processing companies such as PayPal have long offered a nimbler and faster payment option to consumers. The downside has been cost as merchants typically pay a fee for using the service which is often passed on to consumers. US bank J.P. Morgan Chase seems willing to challenge nascent players head on with a payment solution of its own. The big bank maintains the upper hand in the battle as it can offer its services at a significantly discounted rate. The winner will be merchants, which have long complained of exorbitant transaction fees.

    AmEx ventures into on-line loans: In more news of incumbents challenging new market players, AmEx has announced an on-line lending platform for small-business clients. Popularized by the likes of companies such as Lending Club, Square Inc. and On Deck Capital, on-line lending offers loans at significantly reduced turnaround times but at rates sometimes greater than those offered by financial institutions. AmEx is seeking to bridge that divide through quick funding and competitive rates.

    Russian blockchain consortium sees daylight: Novel technologies face an uphill adoption challenge, comprehension of the concept being a major roadblock. Industry consortiums alleviate these concerns and promote further cooperation among members to accelerate adoption. With this in mind, a group of Russian have announced their intention to form a consortium to explore . Among the potential applications the consortium will investigate include KYC procedures as well as joint settlements. The news comes on the heels of a similar Chinese project recently announced and led by 31 financial and firms.

    Blockchain based FX clearing: Clearing trades is expensive and timely with the typical settlement time hovering around three days. Blockchain promises to cut that delay to mere minutes, if not instantaneously. As such, the application of distributed ledgers in clearing and settlements has garnered much attention in the past year. Enter FXCH, a startup Irish clearing house. It successfully cleared an fx-spot transaction using blockchain. Said Franck Mikulecz, founder of FXCH: “Streamlining steps to settle FX trades at a fraction of the current costs is brilliantly disruptive.” The successful transaction will surely give credence to the potential of blockchain in clearing and settling trades.

    The Instagram bank branch: In an unconventional branding and marketing exercise, the Singaporean subsidiary of Malaysian bank CIMB has launched a new social media campaign to promote its offerings. Dubbed The Small Bank Theory, the bank has created an “Instagram branch” in the hopes of familiarizing potential clients with its products and services and to replicate, to the extent possible, the actual experience of visiting a physical branch.

    Please contact me to discuss these and any other related topics. 

    Abraham A. Tachjian

    is Legal Counsel at Standard Chartered Bank – FinTech/Blockchain Adviser and Speaker

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