Banks are able to change their Application Programming Interfaces (APIs) with just two weeks’ notice in what challenger finance firms see as a weakness in the open banking standard.
Ricky Knox, CEO and co-founder of Tandem Bank, told me the digital challenger in the UK initially tried to keep up with changes to APIs being introduced by banks through in-house resources, but had to employ the services of a third party such was the level of resource required.
Tandem is using the services of Token.io to deal with this, because of the resource challenge it was causing.
“We tried doing that ourselves but we thought it would be different to the screen scraping so once you built it there would not be much maintenance. But that was not the case because the banks can give just two weeks’ notice and change anything they want in their APIs,” said Knox.
We had to have our own team working on that constantly readjusting and rebuilding our adaptors
He said banks have to comply with the basic structure but every two weeks they go and mess with their APIs. “To be fair not all the banks mess around quite as much but one of the failings of the open banking standard is allowing them to make changes with just two weeks’ notice.”
The EU’s Payment Services Directive (PSD2) as well as the Competition and Markets Authority’s (CMA) rules for open banking force banks to be capable of providing third-party financial services suppliers access to customer data, if the customer agrees, APIs.
Tandem Bank is a major challenger to traditional financial services firms. It currently offers a credit card, mortgages, savings, personal loans and is building a current account. It has over half a million customers. I recently met Knox and I will be publishing a more detailed article about Tandem soon
Knox is not alone in his view. Several fintechs I spoke to at the recent Innovate Finance Global Summit in London had similar issues.
Why are changes made so regularly. Are the banks trying to make life difficult?
One senior professional in the UK banking sector said he doubts the banks are doing this to thwart open banking, but rather it is the nature of the beast. “There are constantly changes being made at big banks, with a continuous flow of fixes. “They have thousands of changes every day, including bug fixes and performance improvements and. I am sure APIs are part of that.
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