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New API paves the way for further innovation driven by open banking

New API paves the way for further innovation driven by open banking

5 September 2019

SWIFT publishes new API standard for pre-authorisation of funds, further developing its library of API standards designed to enable open banking.

Our new API standard allows a payer’s bank to earmark funds for a purchase in advance, guaranteeing that the future payment will be honoured. It is the second of our Open Banking Extensions API standards, and is the latest addition to a global library of APIs that we are building in collaboration with banks, merchants and fintechs. 

“The SWIFT Pre-Authorization API is further validation that banks, Fintechs and merchants can collaborate to build Open Banking APIs that go beyond the regulatory minimums to support vitally important use-cases.” said Citi’s Tony McLaughlin, Managing Director, Treasury and Trade Solutions. “The global banking community must come together to provide the full suite of retail and wholesale banking APIs so that we can provide the financial layer of the digital economy. The world of platforms provides unlimited new opportunities for banks if they adopt an ‘API first’ mindset.”

Leveraging SWIFT’s standards expertise

We have long been at the forefront of banking standardisation and our expertise is well suited to work with APIs. Earlier this year we published a Pay Later API standard, which allows instant loan approval flow between banks and retailers.
“SWIFT is uniquely positioned to tackle the problem of fragmentation in standards globally,” said Stephen Lindsay, SWIFT’s Head of Standards. “We are pleased to expand our current role to include the global standardisation of open banking APIs. Our work on the pre-authorisation of funds API is another example of the central part we are playing in ensuring the industry can make the most of the new open banking landscape.”

APIs are the way forward and SWIFT is the perfect body to deliver global consistency

Kirstine Nilsson Head of Business Infrastructure, Consumer Payments & Cash Management Swedbank

Why APIs matter

API standards play an important role in open banking because they help speed up the rollout of new services while reducing incremental investment. If each bank offers a distinct API, merchants and fintechs have to adapt to different data structures, workflows and security considerations for each one – adding complexity, cost and time for implementation.  

“Every country is following the developments of ‘Open Banking’ with great interest, beginning with a regulatory regime designed to catalyse developments,” commented Hiroshi Kawagoe, General Manager, Transaction Business Planning Department at Sumitomo Mitsui Banking Corporation. “We can already see that each country is developing their own formats and that sometimes individual banks are developing their own formats. This kind of fragmentation may not be ideal as the banking industry progressively opens up more advanced services through API. Therefore, there is a need to discuss standards, just as we have achieved with the Legal Entity Identifier (LEI) and in many other areas.” 

Kirstine Nilsson, Head of Business Infrastructure, Consumer Payments & Cash Management at Swedbank said: "In the Nordics we know the benefits of collaboration in the standards space. We have built the world leading BankID service and the Swish payment method. We are now collaborating on the P27 pan-Nordic clearing system. The banking industry must come together for the benefit of the digital economy to standardise retail and wholesale banking APIs. Developers these days don’t want to do host connections or SFTP connections – APIs are the way forward and SWIFT is the perfect body to deliver global consistency."

The new pre-authorisation standard will be made available on SwaggerHub for developers of APIs to adopt and use.