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So, what happened in open banking 2019? In Australia, open banking is finally launched; Payments NZ in New Zealand launches open banking APIs and ther NZ banks follow; Mexico continues to be the hot spot for LATAM; Brazil launches open banking model; Additional API offerings launched in Malaysia to further enrich the open banking market there; US banks begin conversations on open banking and to develop open banking 'like' APIs; the Central Bank of Nigeria places open banking on its Payments Vision Statement (PSV) 2030 to become the next EMEA country to implement open banking; and Bahrian makes claim to implementing open banking.

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The Bank for International Settlements (BIS) published the results of its Project Rosalind joint work with the Bank of England. It explored how a universal and extensible application programming interface (API) layer could connect central bank and private sector infrastructures and facilitate retail central bank digital currency (CBDC) payments. It demonstrated that a well designed API layer could work with different private sector applications and central bank ledger designs and that a set of simple and standardized API functionalities could support a diverse range of use cases.

This Boston Fed paper discusses the key developments, drivers, and considerations in the U.S. market that support progress towards open banking and application programming interfaces (APIs) and how APIs offer a wide variety of new services. It finds that opening a bank's platform to third-party applications can create synergies with innovative technology businesses to build a new generation of digital financial activities that enhance the consumer experience. Open banking can create a paradigm shift in how financial institutions (FIs) treat the issue of ownership, storage, and use of data. However, several risks and challenges need to be addressed. The industry is waiting for guidance from the Consumer Financial Protection Bureau (CFPB). Interoperability is lacking and many FIs struggle to replace legacy infrastructures with fully digital platforms, which can require considerable investment. FIs may be struggling to prioritize open banking and API permissioned data with competing projects.

Visa is piloting a suite of application programming interfaces (APIs) that will allow banks to offer bitcoin services. The Visa Crypto APIs pilot program will let clients "easily connect into the infrastructure provided by Visa's partner, Anchorage, a federally chartered digital asset bank, to allow their customers to buy and sell digital assets such as Bitcoin as an investment within their existing consumer experiences." Visa is already working with crypto companies to issue bank cards and has partnered with 35 crypto firms to date, but this is the first time the company has offered crypto services to banks.

The Bank of England is proposing a limit of between £10,000 and £20,000 per individual as the appropriate balance between managing risks and supporting wide usability of the digital pound. The Technology Working Paper accompanying the Consultation Paper sets out an illustrative and complementary conceptual model consisting of a core ledger, API layer, analytics and alias service. The core ledger operated by the Bank might be centralised, running as a traditional database, or it might use Distributed Ledger Technology (whether a blockchain or another form of the technology). The Bank would provide the digital pound and the central infrastructure, including the 'core ledger'. Private sector firms - which could be banks or approved non-bank firms - would provide the interface between the Bank's central infrastructure and users by offering wallets and payment services. These private companies would be able to integrate the digital pound, as the settlement asset, into the services they would offer to wallet holders. The wallets would be operated on a 'pass-through' basis. That is to say, they would not constitute a claim on the wallet provider in the way that a bank account is a claim on a bank. Nor would they represent a custody arrangement. Rather, the wallets would hold all of the customer related information and 'pass-through' the customers instructions to the Bank's infrastructure. All of the digital pounds would be held on the Bank of England's central ledger.

The Central Bank of Kenya (CBK) outlined a five-year digitalization plan to modernize the country's domestic payment landscape. The CBK says it will work to define standards for API development and mandate data portability with hopes that more options and innovative solutions will be made available for users in Kenya to choose from. These standards will include API specifications for identification, verification and authentication; customer account information/data access; transaction initiation; and formats and coding languages for APIs. https://www.centralbank.go.ke/2020/12/23/invitation-for-public-comments-on-the-draft-kenya-national-payments-system-vision-and-strategy-2021-2025/

The Bank for International Settlements and World Bank published a paper on potential central bank digital currency (CBDC) impacts on financial inclusion. It concludes that a CBDC alone may not address financial inclusion challenges, but it could play a role as part of a broader suite of tools. The development of an acceptance ecosystem will be required, which will allow for the seamless exchange between digital and physical forms of currency. Significant and wide-reaching financial and digital literacy activities will also be required if a CBDC is to be afforded the same levels of trust currently enjoyed by other forms of central bank money. Also relevant are including the entry of non-banks and new business models, and applying tiered user onboarding approaches, introducing fast payment services, the use of open banking and APIs to enable efficient interfaces, and ensuring fair, transparent and risk-based access criteria for access to payment systems and financial infrastructures.

The Basel Committee on Banking Supervision today published its Report on open banking and application programming interfaces (APIs). The report monitors the evolving trend of open banking observed in Basel Committee member jurisdictions and the use of APIs.

Open Banking kicks off in Brazil The first of four phases of Brazil's Open Banking implementation has started, as part of the country's broader agenda of modernization of the national financial ecosystem. In the initial phase, there will be no sharing of data on customer registration or transactional activity. Instead, companies participating in the open banking ecosystem will need to open data on their service channels and the characteristics of banking products and services through open application programming interfaces (APIs). In July's second phase, participating institutions regulated, authorized and supervised by the Banco Central do Brasil will start sharing customer data, with their consent. This will be followed by August's third phase where consumers will be able to pay bills and make money transfers outside their bank's environment. The last phase, forecast for December, relates to sharing of additional customer details, in areas such as foreign exchange services, investments, insurance and salary accounts. https://www.bcb.gov.br/detalhenoticia/17307/nota

The Central Bank of Bahrain ("CBB") launched the Bahrain Open Banking Framework (Bahrain OBF) to ensure holistic implementation of Open Banking services by the industry. This framework includes detailed operational guidelines, security standards and guidelines, customer experience guidelines, technical open Application Programming Interface (API) specifications and the overall governance framework needed to protect customer data. These standards follow the comprehensive rules on Open Banking which were previously issued in December 2018.

A paper by a couple of Barclays staffers aims to provide a mitigation to the risk that the adoption of central bank digital currency (CBDC) fragments payments markets and retail deposits. It introduces the concept of ecosystems providing a common programmability layer that interfaces with the account systems at both commercial banks and the central bank. The paper focuses on a potential U.K. CBDC, including industry ecosystems interfacing with commercial banks using open banking application programming interfaces (APIs).

Regulators in the U.S. might be hesitant to mandate an outright move toward open banking, but several factors are pushing the financial services industry in that direction. For starters, 65% of bankers viewed open banking as more of an opportunity than a threat, according to one survey. Respondents believed so strongly in the benefits that 90% expect open banking to boost organic growth by 10%. Opinions, however, diverge when it comes to execution and how financial institutions can best shape open banking to their advantage.

The Wyoming State Banking Board voted 8-0 to grant Avanti Bank & Trust a bank charter. Avanti's approved business plan includes a tokenized U.S. dollar called Avit™*; custody services for digital assets as a "qualified custodian" under the Investment Advisers Act; API-based online banking services, where customer deposits must be 100% backed by reserves; and prime services for digital assets. Avanti plans to provide commercial accounts in early 2021 and other accounts with high minimum balance requirements soon thereafter. Avit will initially be issued on Liquid (a sidechain of the Bitcoin blockchain, in coordination with Blockstream) and Ethereum.

How did Pix become such a success? For starters, the central bank mandated participation by banks and other payment institutions with more than 500,000 transaction accounts. This created a critical mass of users and kick-started the network effects so that the open-loop payment platform could gain traction. The central bank amplified this mandate by facilitating community among the financial institutions participating in Pix. Prior to launch, they organized in-person meetings periodically to update everyone on key milestones and future plans. They solicited input to key decisions and created working groups to tackle specific issues. Secondly, Pix is available to any financial and payment institution licensed by the central bank that offers transaction accounts. Open participation was further fostered by allowing an indirect model of integration that significantly reduces the cost (eg connectivity costs associated with a direct integration). Thirdly, a consistent, simple and quick user experience was enforced by the central bank, including a flexible alias directory (based on phone numbers, email addresses or randomly generated string of characters), and standardized API and QR code technology. Finally, Pix is significantly cheaper for merchants (Pix charges 0.25% of the transaction amount versus 1-2% for credit cards and 3-4% for credit cards. Also with credit card transactions, the merchant may have to wait up to 30 days for their money.

Financial API provider TrueLayer has recorded an eight fold increase in U.K. consumers using Payment Initiation (PI) to pay for goods and services online between March and July. PI is a new form of online payment enabled under the second European Union Payment Services Directive (PSD2) that allows customers to make payments directly through online banking. 88% of the growth was from people with bank accounts held at traditional financial institutions, with account holders at challenger banks such as Monzo and Revolut accounting for 12%.

The National Bank of Kazakhstan (NBK) published a report on the development of the ecosystem of open application programming interfaces (APIs), open banking and digital financial services in Kazakhstan.

The BIS Innovation Hub London Centre has launched the Project Rosalind TechSprint, inviting expressions of interest to come up with retail central bank digital currency (CBDC) use cases. Participants will be required to develop feasible prototypes by using the set of application programming interfaces (APIs) developed in phase one of Project Rosalind. It aims to develop prototypes of an API platform for the distribution of retail CBDC. The purely experimental setup is based on a two-tier distribution model, comprising a central bank at the foundation of the retail CBDC system and with customer-facing activities carried out by the private sector payment interface providers (PIPs).

The BIS Innovation Hub London Centre invites companies and organizations to submit expressions of interest to join the Project Rosalind to develop application programming interface (API) prototypes for distributing CBDCs. The group will be structured into two tiers - API users and technical advisors, with different roles and responsibilities for each. The project, run jointly with the Bank of England, aims to address some of the questions around developing a retail CBDC system, including: how to improve public-private sector collaboration? How to maximize interoperability, encourage competition and enable adoption? How might retail CBDC meet current and future consumer needs in a fast-changing payments landscape? The objective is to explore how this interface could best enable a central bank ledger to interact with private sector service providers to safely provision retail payments.

The world continues to move towards open banking with some markets, including the European Union (EU), the UK and Australia, taking the lead by creating and passing favorable regulations, according to a new report by the Paypers. In a paper, titled Open Banking Report 2019 and released in September, the company explores the current open banking ecosystem and provides an analysis of the present global state of play of open banking.