Leading the API Bandwagon in APAC: The Connect2OCBC Story

The financial services ecosystem is evolving at a rapid pace. As banks set sail on their digital transformation journeys, the API revolution is at the core of this overhaul. Let’s Talk Payment (LTP) believes that open banking will shape the future of the entire financial services ecosystem and foster innovation at the industry level. Inspired by the potential of this technology, we released our first FinTech foresight report in February 2017. This report discusses the opportunities that APIs & open banking can create. And as part of the FinTech ecosystem, nothing excites us more than the prospect of banks & FinTechs working together and providing customers with next-generation financial services. A number of banks have embraced this wonderful opportunity, and OCBC Bank is one of the leaders in this field. Here, we explore the opportunities made possible by OCBC Bank’s Connect2OCBC platform – an open API platform – and the vast set of transactional APIs that was released for the external developer community.

Connect2OCBC was launched in May 2016, an initiative that made OCBC Bank become the first bank in Southeast Asia to launch an open API platform. This platform enables external developers and FinTech players to collaborate with OCBC Bank as an innovation partner. It also helps them to develop unique applications that will add value to OCBC’s customers. This essentially is a clarion call to the creative technological talent available in the market to join forces with OCBC Bank and take a step towards digital, open banking.

When OCBC Bank launched the open API platform in May 2016, the Chief FinTech Officer of MAS Sopnendu Mohanty said, FinTech is enabling banks to create better financial services and products for customers, with APIs as a key enabler for this innovative collaboration. Aligned with the API conference organized by both MAS (Monetary Authority of Singapore) and ABS (Association of Banks in Singapore) in March 2016 to encourage the financial industry to leverage on emerging and innovative technologies, we are delighted that OCBC Bank is taking the lead and contributing to the FinTech ecosystem with the launch of its first set of public APIs in Singapore. The enabling of these APIs is a step in the right direction towards an ecosystem that allows customers to benefit from interoperable FinTech innovations.

Today, one year down the line, OCBC Bank has opened up a vast number of transactional APIs, bringing the total number of APIs to 43 compared to the four APIs available during the launch of Connect2OCBC in May 2016. The newest APIs include savings/deposit/current account; credit/debit card advisors; check status; life/health/property and casualty insurance; equity and forex; home/study/car loans; account transaction history; and merchant card payments. Click here to access the full list of APIs.

The efforts made by the Singapore government to cultivate a Smart Nation, along with a regulatory environment that encourages innovation, have helped OCBC Bank plug into the open data economy. With the current set of APIs, OCBC Bank has adopted a partnership approach, in which the bank will allow a few selected partners to leverage their APIs and develop unique solutions. OCBC Bank is selective in picking the partners they want to work with – taking into consideration all the legal, commercial, strategic and technical aspects of it – in order to maximize the value derived from such partnerships and ensure the sanctity of the bank’s assets. As of now, the APIs are available in sandbox mode for testing and experimentation, and OCBC Bank is working with its selected partners in the production environment. The data used by the sandboxed APIs is anonymized; the actual data will be available for use only after the partners have built their systems and the appropriate security and risk management measures are in place.

Currently, we are considering various options on monetizing these APIs. Our priority is to use the API relationships to expand our footprint, acquire more customers, and also increase our share of their wallet, says Kartik Narayan, Vice President, Business Transformation, at OCBC Bank. Through these APIs, the bank looks forward to providing a personalized and seamless banking experience for their customers in partnership with external developers and the FinTech community. As the industry moves leaps and bounds towards a digital economy, it is imperative that banks acknowledge the power of FinTechs and look for avenues to leverage their capabilities in a way that benefits the entire ecosystem. This is precisely what API does – bringing the two together. So, it’s a win-win scenario.

The real challenge for banks in this kind of transformation is to address the gaps about the cultural mindset change and legacy issues. Also, many banks across the globe are yet to realize the importance of this transformation; they are very slow in their journey from individual partnerships with FinTechs to running their own hackathons and accelerator programs before developing their APIs. If these banks cannot keep up with the pace of the industry innovation, they may face challenges with their legacy infrastructure while attempting to develop and open up their APIs. In this scenario, however, OCBC Bank has been ahead of the curve. And with a strong and agile technological infrastructure, OCBC Bank was able to make this transition smoothly by running both systems in parallel.

The seed of this transformation was sown two years ago when OCBC Bank made a conscious effort to focus on API as the core of their digital strategy. APIs were also a natural fit for the bank’s innovation culture. The different teams within the organization were educated about the nuances and benefits of new-generation open banking. Internal APIs were introduced as a crucial part of the business processes, especially in the back-office and mid-office operations. At the same time, its technology team was educated about the operational and risk aspects of APIs. With the entire organization on the same page and with a skilled IT team leveraging strong in-house technological infrastructure, OCBC Bank has successfully incorporated APIs into its everyday operations.

Certainly, there will be many more challenges ahead, especially on the security front where the bank will have to take additional measures to ensure that their data and their customers’ data are secure from cyber threats. OCBC Bank’s selective partnership approach, along with their increased focus on compliance and risk assessment, is in line with preparations for beefing up security issues related to APIs. The API Playbook, also known as Finance-as-a-service, was put together by both MAS and ABS. This playbook provides guidance on information security standards and governance models for financial institutions and FinTech players that help them to minimize the risks involved when pushing out API initiatives.

Having the right people with the right skills and being in a country with strong infrastructure and a robust regulatory environment have helped us to accelerate our API capabilities. We have become a leader in API banking in Southeast Asia as a result. The importance of APIs cannot be understated as it allows us to harness the power of the community, tapping the ingenuity of our partners to come up with more innovative solutions for our customers, said Mr Dedy Lim, Vice President, Technology Solutions, at OCBC Bank.

In a discussion with the LTP team, Narayan aptly summarizes the situation: There is no doubt that in the long run, across banks, APIs are going to become the new way of doing things. The way customers interact and look at banking today has completely changed. If a bank does not want to be disrupted or disturbed by this revolution, it has to play a part in changing the current landscape and adapting to the API economy. No matter how conservative and risk-averse banks today tend to be, there has to be a process and a system of examining and assessing the associated risks. Steps need to be taken to mitigate or eliminate those risks, and banks need to develop a strong digital strategy in line with the API revolution.

Given that this step is just the beginning of what is yet to come, OCBC Bank’s API store and platform are leading the change for the adoption of APIs in the banking sector.