It is important to understand the status of open banking and application programming interfaces (APIs) in the United States. Financial institutions (FIs) that have a vision for open banking may have an advantage over other FIs, as they re-evaluate existing operating models, invest in open technology architecture, and find new ways to work with ecosystem partners. Open banking is an essential path to innovation and FIs should be developing strategies to support this shift away from traditional banking models. Traditional models rely on FIs permitting data aggregatorsto use screen scraping technologyto access to consumer login credentials for various accounts. The API is widely seen as a more secure and standardized method to make these connections on behalf of app users.

The objective of this whitepaper is to understand key developments, drivers, and considerations in the U.S. market that support progress towards open banking and APIs and how APIs offer a wide variety of new services. The U.S. has a multi-faceted approach to open banking characterized by both public and private developments. Third-party collaboration can lead to new product development. 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 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 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.