SWIFT has joined forces with HSBC in defining a common industry standard for application programing interfaces (APIs), reusing ISO 20022 components, for the Hong Kong banking community. The partnership facilitates the next phase for open banking in the country, which is scheduled for implementation by the end of October 2019.
In July 2018, the Hong Kong Monetary Authority introduced its open API framework to facilitate the development and broader adoption of APIs by the banking sector. Since its launch, over 500 APIs have been made available by the 20 participating banks.
The new standard allows merchants to set up direct debit authorisation and initiate the collection instruction to banks on behalf of their consumers. This initiative by SWIFT and HSBC aims to avoid fragmentation on common use cases, speed up and ease API integration efforts and incremental investment for industry participants as well as ensure interoperability with the Hong Kong Faster Payment System’s (HK FPS) underlying clearing and settlement system by reusing ISO 20022 as a standard.
ISO 20022 is already widely adopted by market infrastructures across the world, including HK FPS, and is set to become the new standard for cross-border payments in the years to come, making it a logical choice when adopting a new technology.
“In recent years, the financial industry has moved from safe payments to fast payments, and is now embracing richer data payments as the world is moving towards open banking. In this context, the adoption of a common set of standards, such as ISO 20022, is a necessity to ensure interoperability between systems and reap the full benefits of open APIs,” Lisa O’Connor, managing director of Capital Markets and Standards in the Asia Pacific, said.
While Nadya Hijazi, head of digital, global liquidity and cash management at HSBC said that they “are delighted to lead with SWIFT to develop the ISO 20022 JSON standards that enables more of (their) corporate clients and treasurers to reap the benefits of API connectivity.”
“At HSBC, we understand that the market is rapidly changing, with customers more technologically sophisticated and digitally oriented in their approach. We are, thus, committed to meeting the demands for an industry that is faster, more personalised and easily accessible. At HSBC, we see immense value in defining an ISO 20022 JSON standard and have adopted these standards in our treasury APIs for collections in Hong Kong,” Hijazi added.
As a cooperative, SWIFT is working to minimise inefficiencies caused by heterogeneous regulatory requirements that could limit opportunities for common API frameworks and lead to fragmentation between regions. It brings its expertise in standards, particularly the ISO 20022, which is the standard for electronic data interchange between financial institutions, to work with HSBC.
This joint initiative is set to define the building blocks for the standardisation of Hong Kong’s open APIs and ensure their further interoperability with other markets.
Re-disseminated by The Asian Banker