OpenWealth: Switzerland’s Financial Industry Defines Standards for Open Finance by Itself

OpenWealth: Switzerland’s Financial Industry Defines Standards for Open Finance by Itself

With OpenWealth, the Swiss wealth management industry has agreed – without being forced by the regulator – on a standard for application programming interfaces, the APIs. For implementation, the newly founded OpenWealth Association relies on the open finance platform bLink from SIX.

Open finance, i.e. the exchange of customer data between financial institutions and third-party providers, is gaining traction worldwide, so the call for standards is accordingly loud. Unlike in the European Union, where the PSD2 directive sets certain compulsory guidelines, financial institutions in Switzerland can be part of the solution themselves without the need for a regulator. If Marianne Wildi, CEO of Hypothekarbank Lenzburg, is to be believed, they could be even faster at this than their regulated neighbor. “In Switzerland, we have long since gone further than the EU,” she said in a recent interview with the newspaper Finanz und Wirtschaft quite bluntly.

This requires, however, a “shared understanding of the legal framework and coordination across the industry,” as the Swiss Bankers Association (SBA) recently wrote. The SBA therefore has defined institutional responsibilities and competences in collaboration with the Swiss FinTech Innovations (SFTI) industry association and relevant market participants. The SBA takes on a coordinating function while SFTI, together with other market participants, lays the groundwork for standardized application programming interfaces (APIs):

  • The SBA coordinates the clarification of legal and safety-related issues and represents the combined interests of the industry in dealings with the authorities and the public.
  • The SFTI is responsible for establishing uniform API standards. With its broad support in the industry, it acts as an umbrella organization for the development of professional and technical open finance principles.
  • API specifications are defined either directly by SFTI or in close cooperation with market-driven initiatives.
  • All recognized API specifications and safety recommendations for specific business cases will be consolidated in the SFTI’s common API catalogue.

OpenWealth, a Standard that Is Also Implemented

The new OpenWealth APIs prove the success of this approach. In December 2020, delegates from the asset management industry reached an agreement on adopting communally shared APIs. SFTI incorporated them into its common API catalogue. The standards are managed and maintained by the OpenWealth Association, which was founded specifically for this purpose under the leadership of Synpulse together with members like St. Galler Kantonalbank, Zürcher Kantonalbank, Alphasys, Assetmax, Etops/Evolute or SIX. Simon Alioth, Head of Open Banking at Synpulse and Head of the OpenWealth Asscociation, highlights the importance of this collaboration: “The OpenWealth APIs should be implemented by as many financial institutions, WealthTechs, and providers of portfolio management systems as possible. This is the only way to create a standard. Close coordination among a leading industry association is helpful for this.”

A standard is no use to anyone if it is not implemented and usable in the market – and as efficiently as possible. The use of APIs requires that financial institutions have certain competencies and resources:

  • providing the APsI in a highly available and secure environment
  • contract management for a large number of third parties that want to connect to the APIs
  • obtaining and managing end-user consent 
  • due diligence of third-party providers
  • offering a developer portal as well as testing facilities and sandboxes including technical support
  • robust partner management, such as for the coordination of updates or incidents

For third-party providers, the challenges lie not only in contract management but also in ensuring IT security and data protection when handling customer data.

bLink as a Central Open Finance Platform

Central open finance platforms can take over a large part of these requirements for both sides and thus simplify the implementation of and access to standardized interfaces.

Therefore the OpenWealth members St.Galler Kantonalbank and Zürcher Kantonalbank selected to use the bLink open finance platform from SIX to operationalize the OpenWealth APIs, which supplement existing API offerings for accounting tasks. “We strongly believe that bLink will be able establish itself as a relevant and sustainable player for open finance in Switzerland. With the admission check and the uniform contracting system, bLink creates effective added value,” says Falk Kohlmann, Head of Market Services and Member of the Executive Board of St.Galler Kantonalbank, explaining the decision. Philipp Schumacher, Head of Product Management Investments Special at Zürcher Kantonalbank, also sees major advantages for the bank and its customers. “With the  OpenWealth APIs in combination with bLink, we offer external asset managers, custody customers and their service providers a simple and efficient way to connect to our new data interfaces and build their processes on them. This allows us to meet an important customer of institutional investors.”

The benefit for financial institutions lies in the scalability of central open finance platforms. Once they and third-party providers are on bLink, they can enter into partnerships with all other participants with little expenditure of time and resources. This, in turn, fosters the nationwide establishment of recognized API standards in the market.