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What Developers Need to Know about Open Banking

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With open banking, developers can integrate financial data from multiple institutions within the same application or share financial data between applications more easily.

Ask a developer to name the top ten most exciting types of apps to build, and banking apps are not likely to be on the list. At this point, finance applications are a bread-and-butter affair: They’re critical for many companies, but they’re not usually flashy or technically sophisticated. But that’s changing thanks to the advent of open payments and open banking, which are transforming the way developers build finance apps. Here’s a look at what open banking means for developers.

This approach to development lets applications share a bank’s financial data via APIs. With open banking, developers can integrate financial data from multiple institutions within the same application or share financial data between applications more easily.

That may not seem like an especially big deal. In most other corners of the IT ecosystem, sharing and integration are the norm. It has long been possible to link a calendar app to your email account, for instance, or to write a third-party app that integrates with a social media platform.

In the world of banking, however, integration is a relatively new phenomenon. Most banks have traditionally built apps that work only within their own ecosystems. Finance tools that could pull a consumer’s data from multiple institutions were few and far between, and their methods for collecting data were usually technically complicated. They relied on hacky approaches like scraping Web interfaces rather than neat integrations with an API.

See also: EDA in Financial Services: Modernizing Apps and Embracing Real-Time

Why build open banking apps?

From that perspective, it means developers can build more innovative finance apps for their customers by integrating directly with the financial institutions that serve those customers.

Open banking also simplifies the burden developers face in securing finance apps. Collecting financial data using an open API is generally a safer approach than trying to scrape it or use other hacks to get data from banks that don’t make it easy to share it securely.

Open banking also offers the advantage from a business perspective of making it easier to bridge the gap between legacy banks and fintech startups. Historically, the app ecosystems of the big, decades-old banks were not well integrated with those of newcomers to the finance industry. It helps to change this by allowing both groups of companies to work together through open APIs instead of simply competing with each other.

Getting started with open banking development

The first step in building a modern banking app is deciding which API to use. Open banking APIs fall into two main categories:

  • Private APIs: Some banks develop their own APIs, like Bank of America’s CashPro APIs, that third parties can use to integrate with their systems. These APIs tend to be limited in functionality, but they can be used to build open banking apps within the scope of the features that the APIs support.
  • Open APIs: Banking APIs that are explicitly designed for use by anyone, like OBP-API, are the most obvious place to start when developing an app.

Once you’ve selected an API, building the rest of the open banking app is relatively straightforward. Depending on which language you are writing in, you may be able to simplify development by taking advantage of a framework that makes it easier to interact with the API — like API Manager in the case of the OBP API.

Conclusion

Developers can create much more interesting banking apps by taking advantage of open banking, which is breaking the tech ecosystems of individual banks out of their silos and enabling more integrated, smoother finance software.

Chris Tozzi

About Chris Tozzi

Chris Tozzi is a freelance technical writer and editor, specializing in topics such as DevOps, security, open source, and cloud computing. His most recent book, “For Fun and Profit: A History of the Free and Open Source Software Revolution,” was published by MIT Press in 2017. He is also Senior Lecturer in IT and Society at Rensselaer Polytechnic Institute in Troy, New York.

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