SINGAPORE: In a step toward achieving its Smart Financial Centre initiative, the Monetary Authority of Singapore (MAS) on Wednesday (Mar 30) mapped out a plan which showed the central bank moving toward an open Application Programming Interface (API) architecture.
An example is how the MAS plans to make its data available through APIs which can be used easily by third-party applications, said executive director and head of MAS' IT Department Lawrence Ang at the end of the two-day Financial World: API Conference 2016. This aims to lay the groundwork for banks and financial institutions to leverage information to serve consumers better.
APIs – defined as sets of requirements that specify how one application interacts with another – will enable financial institutions to integrate their systems internally, and pave the way for seamless interaction with third parties for the development of better products.
“APIs reduce the time to market, lower the cost of implementing projects and changing business rules,” said Mr Ang, who added that there will be no compliance issues as these data are already available for the public via Excel spreadsheets and PDF. “I believe that someone will make good use of that data and create something that customers will benefit (from),” he said.
These comments follow the remarks of MAS chief Fintech Officer Sopnendu Mohanty, who encouraged traditional banks and fintech players to collaborate on Tuesday. APIs, which Mr Mohanty described as an “unstoppable force”, will be the platform to foster more partnerships.
MAS also raised the example of how APIs can increase the efficiency of certain regulatory processes, such as banks’ submissions of applications and transactions. This will be key in the promotion of regulatory technology (RegTech) and helping the central bank to ensure a safe and secure financial sector, Mr Ang said.
“The current way of preparing data is not efficient... In future, we have to think of smarter ways of doing things because when we are under distress, there is no (time) for us to wait for everyone to submit data, run some data extraction and merging in order to find out which organization or entity is causing (the problem) so we need smarter ways... We want to help your organisation to be more efficient in submitting data that is crucial for regulators to ensure financial stability, therefore we must pursue this route of collaboration.”
The central bank is also counting on the use of APIs to spur innovation between financial institutions and fintech players so as to improve customer experience.
Mr Ang raised the example of how a consumer who has accounts with more than one bank is currently receiving different statements as lenders issue bank statements in their own format. However, if these statements could be released in a standardised format through the same set of APIs, innovation could occur with developers being able to make better use of the data.
“By providing statements in standard formats with the same set of APIs, app developers can come together to merge with other data service providers, and this is where robo-advisors could come to fruition. Consumers and developers will gain, and the whole ecosystem will gain.”
When asked when these will likely occur, the MAS executive did not reveal a specific timeline. He could only say that the “lower hanging fruits” of achieving agility and the provision of data through APIs will come “progressively in months to come”.
For the others, Mr Ang said it will require both the regulator and banks to come together and agree on a common standard, but MAS hopes that its strategy of integrating APIs can act as a “story of advocacy” and serve as an example for industry players.
"I’d like to (address) the debate about who is stealing whose lunch. It’s not about anybody taking anyone’s lunch (because) the potential that can be generated, the value that can be created will be so immense that none of us can anticipate what is to come."