What is API Standard? A Deep Dive into the UK's Open Banking Specifications

In today's digital era, the financial sector is experiencing a significant transformation with open banking taking center stage. This revolution is fueled by Application Programming Interfaces (APIs), which serve as the foundation for open banking.

APIs facilitate secure and efficient data sharing among various financial institutions. In the United Kingdom, an API standard has been established to ensure consistency, security, and interoperability within the open banking ecosystem.

Let’s take a look at the meaning of the API standard in the UK context in more detail. Note that to date, there isn’t a common API standard applied globally.

What is API Standard in the UK?

The API standard in the UK consists of a set of rules and protocols that govern the design and usage of APIs within the context of open banking. It encompasses several critical elements, including security measures, data formats, and communication protocols.

By adhering to this standard, all APIs employed in open banking are ensured to be uniform, dependable, and secure. This promotes the smooth sharing of data among diverse banking and financial institutions.

Brief History of UK’s API Standard Explained

The journey toward open banking and the establishment of the API standard in the UK commenced in 2017 with the mandate by the Competition and Markets Authority (CMA). It required the nine largest banks in the UK, referred to as CMA9, to open up customer data using secure protocols.

To deliver this, the banks established an independent Open Banking Implementation Entity (OBIE). It aimed to develop security and technical standards for all participants involved, leading to the creation and continuous enhancement of the UK's API standard.

api standard

API Specifications in the UK

The UK has comprehensive API specifications that address various aspects of API design and usage. These specifications encompass a wide range of guidelines and requirements.

  • Read/Write APIs allow third-party providers (TPPs) to access data and initiate payments on behalf of customers, provided they have the customer's consent.
  • Fund Confirmation APIs enable TPPs to verify whether a customer's account holds adequate funds. This information helps TPPs determine the available balance for their services.
  • Event Notification APIs allow banks to promptly send real-time notifications to TPPs regarding specific events related to a customer's account.
  • Security Profile provides an overview of the necessary security measures for APIs. This includes ensuring customer authentication and implementing robust data encryption protocols.

Who Has to Follow API Standard?

All participants in the open banking ecosystem in the UK, including the CMA9, other banks and TPPs, must adhere to the API standard. This adherence ensures seamless and secure interaction among all participants while providing customers with a consistent and reliable open banking experience.

Final Thoughts

The API standard in the UK is a vital foundation of the open banking revolution. It facilitates secure and efficient data sharing among different financial institutions. By adhering to this standard, participants in the open banking ecosystem can ensure a consistent, reliable, and safe customer experience.

As open banking continues to progress, a global API standard will likely develop and play a pivotal role in shaping the future of the financial sector.

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