Open Banking in Switzerland

Expert article for Netzwoche from 2 October 2019

In rolling out PSD2, the Payment Services Directive, EU legislators have compelled banks to open up customer interfaces, thereby making their services available to third-party providers, such as fintech companies. But how is Switzerland’s financial sector, which is not bound by these regulations, dealing with this situation?

“Open banking” is all about opening up access to banking services via an interface (API), so that third-party providers (TPPs) can deliver financial services to customers via the same interfaces. Financial institutions in the EU have been obliged to make their APIs available to third parties since Q3 of 2019 and the upshot in several member states has been that standardisation bodies, such as the Berlin Group in Germany and Open Banking Ltd in the UK, have established themselves within the software and banking industries. Their goal is to ensure that as many banks as possible use the same approach to fulfil these regulatory requirements, opening up the possibility of unfettered, standardised access for TPPs.

Switzerland is playing catch-up with these foreign providers; unlike in the EU, there are no domestic laws that specifically require such open access, and any compliance on the part of the banks is voluntary. Here, it should be noted that the opening-up of interfaces for TPPs is an international trend that goes far beyond the confines of the financial sector or national borders. In a best-case scenario, breaking up the value chain in this way will create an ecosystem in which an array of partners can bring their respective strengths to the fore – playing to your own strengths promotes a trend towards solutions that model specific use cases in far better ways than previous approaches: they are faster, more user-friendly and highly efficient, as has been shown in a range of international best-practice codes in the financial sector and elsewhere.

OpenBankingProject.ch, an affiliation of partners from the banking, software and IT services sectors, has set about addressing this need for action. Their aim is to play an active role in defining the parameters for open banking as a key tenet of successful, open ecosystems in Switzerland. The project is focusing on the following issues:

• Developing an interactive knowledge platform dealing with all aspects of open banking on which knowledge can be exchanged between the various parties, allowing for the creation of new business models.
• Selecting and, if required, implementing existing API standards for Switzerland, such as the Berlin Group’s ‘NextGenPSD2’, for example. To avoid reinventing the wheel, existing adaptations of standards from other countries in the EU will be employed, while accommodating particularly Swiss features such as ESR payments.
• Providing an open yet secure platform that will allow TPPs from Switzerland and abroad to test their solutions for Swiss localisation of APIs in a pre-production scenario, a so-called “sandbox”.

OpenBankingProject.ch differs from other API initiatives in Switzerland in two key ways:

1. Openness – everyone is allowed to get involved and is more than welcome to do so.
2. A clear focus – not on reinventing the wheel but rather on building upon existing knowledge and standards, and adapting these for use in Switzerland.

The founding partners of the OpenBankingProject.ch are convinced that their approach will lay the foundations for a successful open banking movement in Switzerland as early as this year.