BRINK: How Japan’s Open API Adoption Could Change Financial Institutions in the Region
It is now common practice for many businesses to display Google Maps when publishing their address and location on a website. Technically speaking, this is realized by outputting map data using Google’s application programming interface (more commonly referred to as API). An API generally refers to a technical specification for operating a program by another program—it defines command statements (commands and functions). Put very simplistically, it lists the operations developers can use and explains what these operations do.
The use of open API has now spread to even the most conservative industry: financial services. In May 2017, the Japanese financial industry shifted to a new framework—the amended Banking Act introduced a registration system for Electronic Settlement Agency Service Providers, so-called third-party providers (TPP), and announced policies of collaboration between banks and TPPs. Measures concerning the promotion of open innovation at banks eventually emerged as new regulations. This was a major shift in Japan’s financial regulations.
Since they first began employing computers in the 1960s, Japanese banks have always limited themselves to closed and rigid approaches to system development. The open API will be a powerful trigger for the value chain revolution in the Japanese banking and financial services industry...