HKMA announced the implementation plan for Phase III (Account information) and Phase IV (Transactions) of the Open Application Programming Interface (API) framework. HKMA has decided to adopt a progressive approach to implementing Phase III and IV API functions that enable viable use cases involving lower implementation cost and risk. The Open API framework is intended to facilitate development and wider adoption of APIs by the banking sector and was introduced in July 2018.
The Open API Framework has four phases—product information (Phase I), customer acquisition (Phase II), account information (Phase III), and transactions (Phase IV). Following the implementation of Phases I and II of the Open API Framework in January and Based on recommendations in the Accenture report titled “The Next Phase of the Banking Open API Journey," HKMA decided to adopt a progressive approach to implement phases III and IV. The progressive implementation model will allow the highest value solutions to be deployed in the market in a sequential, stable, and sustainable manner. The initial batch of API functions, covering deposit account information and online merchant payments, are expected to be implemented progressively by the 28 participating banks starting from December 2021.
The report recommends that, since Phases III and IV cover sensitive data, including customer account information, the industry may consider developing further worked examples and/or principles (if necessary) on the scope of the common baseline around risk management, including the guidance on consent management, liability and dispute handling. While a bilateral Common Baseline approach is the most appropriate third-service provider governance arrangement for implementing phases III and IV for the time being, it will be desirable to assess other governance models in the future to keep pace with global developments and further maximize the benefits of banking Open APIs. Finally, ongoing customer education as well as the building of customer trust in banking Open APIs are important if use cases are to be successfully implemented. This is a shared responsibility of all ecosystem partners.
To promote secure and efficient implementation, HKMA will facilitate the Hong Kong Association of Banks (HKAB) to develop a set of standards covering key areas of customer experience and authentication, technical and data standards, information security, and operation standards. HKAB will also refine the Phase II common baseline document (for third-party service providers onboarding to facilitate the implementation of phases III and IV, enhancing the requirements, where necessary) to include the scope of Open API implementation phases III and IV. Both the standards that have been set and the refined common baseline document are expected to be published by the end of 2021.
Keywords: Asia Pacific, Hong Kong, Banking, Open API Framework, API, Fintech, Regtech, HKMA
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