The API Centre has continued to make great progress across our wider work programme. In particular, the focus of the centre has been on continuing to lead the industry by developing new and updated best practice guidelines. We’ve also been making it easier to test and form bilateral agreements, further develop our standards, and strengthen governance frameworks for our API standards.

Join us at The Point 2022 conference

The API Centre will be running an online open banking session on day two of Payments NZ’s flagship industry conference, The Point 2022 – Reframing the Future. The session, called ‘The future of open banking in Aotearoa’, will feature a panel drawn from across the industry. Our panellists all work closely with the centre and have extensive local industry knowledge and experience. Our API Centre Manager Phil Cass will begin by taking us through the open banking journey in Aotearoa so far. This will then be followed by the panel discussion, which will be facilitated by Mike Booth from EY.

Our panel will discuss the role of the API Centre and where we currently sit within the payments and fintech ecosystem, what’s next for open banking in Aotearoa, what the country can learn from overseas jurisdictions, and their thoughts on the future impact of a complex and evolving local regulatory landscape for open banking in Aotearoa. 

V3.0 standards development underway

We’ve made great progress with the development of our version 3.0 standards for the centre’s Account Information and Payment Initiation APIs. V3.0 will have substantial new features including multi-authorisation or the ability to make payments from bank accounts that require more than one signatory (such as business or trust accounts), and two-way notifications, where an API Provider can initiate notifications to a Third Party if a customer chooses to stop sharing their account information or withdraws an enduring payment consent authorisation.

Alongside this, we’re also in the early stages of planning out the V3.0 minor version series by identifying a shortlist of technical priorities. In future minor version releases, we’re looking into areas such as future dated payments, or establishing a payment to be made at some point in the future, improvements to streamline the refunds process, the possibility of including a function to enable single debits to be made from multi-creditor accounts, and batch payments.

New equivalency principle

We’ve finalised our open banking equivalency principle which covers how to manage customer authorisations for joint accounts and other scenarios where there are more than one bank account holder or signatory.

Like the UK, we’ve proposed a principles-based approach anchored in current banking, payments, and customer consented data sharing practices. We’ve chosen to model our design after the UK approach as we recognise that it provides a better, simpler, and more consistent customer experience. As the API Centre’s standards has also been leveraged from the UK, this aligns the principle with our standards.

Our equivalency principle puts the customer at the heart of the design, allowing them to direct their bank to share their data and/or initiate payments using open banking APIs in a manner that is consistent with the customer’s existing Account Operation Authority and banking terms and conditions. This means that if a bank account currently requires more than one signatory to authorise an action, then the same level of authority will apply across open banking products and services created using our standards.

A framework for performance monitoring

We’ve been working on an industry-level API performance and monitoring framework to ensure that a standardised API will meet reasonable performance expectations so they can well support customer products and services. We expect this will help increase uptake and usage of our API standards. Having these expectations set out clearly from the start also supports the API Centre’s goal of promoting payments system efficiency, safety, and innovation using API standards.

Our performance and monitoring programme aims to ensure API Providers are supporting Third Parties within agreed targets, enabling Third Parties to be confident that when they make an API call, the API Provider’s response will be provided within a reasonable parameter. This gives Third Parties the confidence that their service or use case will not be unreasonably constrained or impacted by an API Provider’s technical performance.

This programme has been built with learnings drawn from international precedence and experience. We favour a balanced approach towards establishing performance monitoring, including making sure it’s suited to the unique needs of the Aotearoa market, and that realistic and achievable targets are set that balance the needs and requirements of both Third Parties and API Providers.

Partnering project continues to evolve

We are currently busy delivering the final pieces of the API Centre’s partnering project, which focuses on delivering near-term benefits to our Standards Users. This work also has the potential to inform the industry’s views on the requirements of the Consumer Data Right (CDR). The centre’s partnering project is based on five key pieces of work. This includes a centralised due diligence assessment service, redeveloping our existing bilateral agreement template, developing a proposed state partnering and accreditation framework, and developing support information for Third Parties around obtaining insurance cover for open banking scenarios.

We are also exploring ways the centre can work and share our learnings with other sectors. While bilateral agreements will still need to involve both an API Provider and a Third Party, our centralised due diligence assessment service aims to reduce the level of duplication in the current partnering processes. It has been designed to be suitable as a building block for a full accreditation service under the impending CDR. We are on target for a late 2022 implementation date and will be letting Standards Users know more as the project progresses.

New proof-of-concept framework

Our Business Working Group, who is responsible for providing advice on the strategic direction of the centre and standards development activities, has drafted a proposal for a proof-of-concept framework which will offer Community Contributors a stepping stone to becoming Third Parties. The framework will streamline the on-boarding process for proof-of-concept enabling Community Contributors and Third Parties to form bilateral agreements to enable live proving for period of time with a limited number of customers. This has benefits for API Providers, Third Parties and those interested in becoming Third Parties.

Community Contributors, Third Parties, and API Providers will be able to run proof-of-concept trials involving real customers with partner organisations outside of the full centre’s terms and conditions, but within certain parameters. It is expected that API Providers will build in proof-of concept as an option in their onboarding processes. While the centre will provide general support to frame and highlight the proof-of-concept model, we will not be directly involved in its day-to-day operations but will be kept generally informed with what’s happening.

Other developments in the API Centre

While the centre has made good progress with our bigger, more visible projects, we’ve also been making headway with some of the fundamental components that forms the foundations of open banking in Aotearoa. API Provider readiness has been an area of high interest to the ecosystem. While we do require API Providers to report on their readiness dates, which are then published on our website, we’ve also been looking into how to provide greater certainty to the industry as a whole. We’re looking to deliver an industry implementation plan which will allow for standards delivery dates to be set by the API Centre for API Providers, who will be obliged to deliver to the plan in the terms and conditions.

That’s all for this update. If you’re interested in finding out more about the work we’re doing, get in touch with the team. Or if you’ve been forwarded this update and would like to receive them directly in your inbox, then subscribe to our mailing list.