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Global Media and Communications Watch The International Legal Blog for the Tech, Media and Telecoms Industry
Posted in Policy & Regulation Mark ParsonsTommy Liu

The Dawn of a New Era: The HKMA launches its Open API consultation

On 11 January, 2018, the Hong Kong Monetary Authority (the “HKMA”) published its “Consultation Paper on Open API Framework for the Hong Kong Banking Sector” (the “Consultation Paper”). The Consultation Paper summarizes the approach the HKMA has taken to date in actioning the “Open API” initiative announced by HKMA Chief Executive Norman Chan on 29 September, 2017: one of seven programs forming part of the HKMA’s “New Era of Smart Banking”. Our briefing note summarizes and provides commentary on the Consultation Paper, and sets out high level planning for the formalization of an Open API policy framework going forward. Industry comments are requested by 15 March, 2018.

The Big Picture

Objectives of the “Open” Era

The objective of an “open” banking environment has gained traction in a number of jurisdictions, the UK in particular, where a second phase of “Open Banking” was launched earlier this month. The idea is to encourage a more competitive and more innovative financial services sector by requiring (or at least encouraging) financial institutions to share product and customer information through secure application programming interfaces (“API”). The free flow of data is intended to make it easier for customers to switch institutions and pick and choose amongst specific competitive product offerings, rather than receive all of their financial services through a single “bundled” retail banking relationship.

Going further, “open” initiatives envisage a financial services ecosystem supported by non-bank third party service providers (“TSPs”) that engage in activities such as providing product comparisons and forming new transactional interfaces between customers and their financial institutions.

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