Open Finance is an important development in how financial services are delivered and experienced. By standardising data principles, security and safety standards, Open Finance principles help to eliminate traditional barriers to access and sharing of financial information among various financial institutions, enabling consumers in Singapore to move easily across different financial institutions and manage their finances securely. Recognising its potential, the Monetary Authority of Singapore (MAS) has taken a market-driven approach in launching various initiatives to support Open Finance adoption in Singapore.
Generally, Open Finance is a data-sharing model allowing users to share their data with multiple financial institutions and designated third parties with the user’s consent. Open Finance embraces a broad range of financial products and sectors, including insurance and investments, aiming to create an interconnected ecosystem that empowers consumers. It also aims to increase competition and innovation in the financial sector.
In 2016, MAS and the Association of Banks of Singapore (ABS) published the Finance-as-a-Service API Playbook (API Playbook) which provides guidelines on security standards and principles that developers should consider when building their APIs for interoperability among finance service companies.
In 2018, the ASEAN Financial Innovation Network (AFIN), of which MAS is a member, launched the API Exchange (APIX), an online global fintech marketplace and sandbox platform for financial institutions. APIX aims to enable financial institutions to be connected in the marketplace, collaborate in experimenting potential features in a sandbox environment and drive API adoption to facilitate financial inclusion across the Asia-Pacific Region and beyond.
In 2020, MAS, in collaboration with the Smart Nation and Digital Government Group (SNDGG) and ABS, launched the Singapore Financial Data Exchange (SGFinDex). SGFinDex is a national digital infrastructure that enables consumer to securely retrieve and consolidate their financial information from multiple financial institutions in a single platform using their national digital identity, Singpass. Notably, users retain control over how their data are shared over SGFinDex.
Open Finance standards help promote competition within the FinTech space and break down traditional barriers such as siloed datasets. Consumers thus have a more comprehensive understanding of their financial standing and freedom of movement across financial institutions. To reach a broader consumer base, financial institutions should work closely with their API developers to ensure their APIs meet the standards and principles that support interoperability and security in Open Finance.
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Disclaimer: This article is for general information only and does not constitute legal advice.
