The SAR still needs to work on extending APIs for banking needs.
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With a score of 6.6, Hong Kong trails behind the Lion City which holds an index reading of 8.1 and Australia at 7.1 but outpaced the Asia-Pacific average of 5.8.
Open banking leverages on the use of APIs to share the data they have on customers with third-party players like fintech firms in an effort to build new applications and create new revenue streams from a value proposition that they could upsell and cross-sell.
The index evaluates the readiness of a country based on five factors: adoption of Application Programming Interface (APIs), fintech/third-party ecosystem, state of data-based transformation, data monetisation and state of innovation.
Hong Kong holds an ‘advanced’ score in the state of data-based transformation and innovation and an ‘intermediate’ score across the three remaining categories.
Singapore also beat Hong Kong to the punch after publishing guidelines on open banking as early as 2016, the first in APAC as the SAR only sets to release a final list of HKMA-endorsed open APIs by Q4 2018 following the release of a consultation paper in early 2018 creating a general classification of open APIs.
Together with Australia which unveiled similar guidelines in May 2018, the three economies rank as ‘early adopters.’
New Zealand, South Korea and India ranks as ‘steady warm-ups’ as they do not generally have concrete guidelines in place although concepts and a thriving fintech ecosystem can be found across the industry. Thailand and Malaysia are dubbed ‘fast followers’ with expectations of guidelines to be released by mid-2019 to early 2020 whilst Japan and China are ‘giants with potential.’
On the other hand, Taiwan, Indonesia, Philippines and Vietnam still have other priorities to settle such as financial inclusion before they can embark on their open banking journeys.
“Open Banking in the Asia-Pacific region is unlike Europe, where it is primarily driven by regulators,” the report’s authors said. “In general, banks in the Asia-Pacific can decide for themselves if they want to pursue it, how soon, and their preferred approach for partnering with trusted third parties (TTPs).”
The Finastra’s Open Banking Readiness Index is developed by Finastra in cooperation with with IDC Financial Insights.
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