Naturally, such an exploration must also broach the subject of APIs (application programming interfaces) – an acronym that is being proclaimed as the great salvation of digitalisation strategy in some bank management circles. Do APIs, particularly those for account information and payment order services, have the potential to render long-serving file transfer protocols like EBICS obsolete? This question especially arises when taking into account that start-up and fintech companies tend to prefer these streamlined APIs to the rather complex implementation process of EBICS.
To find an answer with regard to Switzerland, the reader less familiar with the Swiss financial market needs up-to-date background information. First of all, we should keep in mind that Switzerland is not a member of the EU and as such is in no way bound by the PSD2 (second payment services directive). This means that financial institutions are not obligated to offer APIs, which eliminates one major driving force. Unlike FinTS in Germany, there is also no standardised online banking interface in Switzerland. Nonetheless, the good news coming from the European Union has been heard in Switzerland, as well.
Before diving deeper into the hot topic of API initiatives, let us once again acknowledge how widely the use of EBICS has spread. In the past five years, following the example of the German implementation, the EBICS protocol has made its way into all larger institutions as a standard service offer for electronic data exchange with corporate customers. The ability of the protocol to transfer very large volumes and, more recently, the use of the EDS (electronic distributed signature) are highly appreciated by medium-sized and large corporate customers. All notable Swiss software providers with electronic banking solutions have made EBICS part of their product offer.
So far, so good, one might think. As mentioned before, the API discussion in Switzerland is in equally full swing. There are currently two initiatives worth noting, which we will briefly discuss in a moment. To be clear upfront, the author does not consider these initiatives a replacement for EBICS, but rather an additional option in the range of bank interfaces that is suited for a specific customer segment (usually smaller corporate customers that use cloud solutions for bilateral data exchange with financial institutions).
A highly promising initiative appears to be "Corporate API" by SIX and the Swiss financial institutions. The name refers not only to a freely accessible standard, but also to a suitable platform for that standard. Both are being developed by SIX in collaboration with representatives of financial institutions and software providers. The platform enables easy participation in a newly unfolding ecosystem that is set to provide services far beyond the PSD2 scope (AIS, PIS).
The formats offered by "Corporate API" are JSON and ISO 20022 XML. The JSON variant will be extremely easy and fast to implement and is intended for software providers who do not require the complexity of ISO 20022 messages. The ISO 20022 XML variant supports the entire spectrum of possibilities known from the CH payments migration. The end of 2018 will already see the first tests with piloting financial institutions and providers.
Another current project is called "Common API". The "Common API" by SFTI (Swiss Fintech Innovations) is based more heavily on the PSD2 and the implementation of the Berlin Group. In contrast to the "Corporate API", the specification of the SFTI defines the API in more general terms and leaves the selection of the target group to the service provider. According to information by SFTI, the big banking application providers are involved in the development of this standard. SIX has accompanied the development process of the SFTI specification from the beginning and will carry forward the results of the SFTI working group in the future. It is hence entirely possible that the two standards will turn out to be at least partly compatible.
The situation for software developers in Switzerland is not exactly simple, with EBICS as an established productive protocol on the one hand and new initiatives waiting in the wings on the other. Depending on the customer segment and the business model, solution providers are faced with the question which implementation they should offer – or whether perhaps it should be more than one. What's more, some financial institutions have by now released proprietary interfaces (such as the Hypothekarbank Lenzburg, which presents itself as a highly innovative fintech bank). If the application area is extended to Europe, already well-known initiatives like "Berlin Group", "STET" or "Open Banking" are added to the mix. As to be expected, the Swiss financial market has not adopted any of the existing standards, the "Swiss finish" remaining rather popular in these parts.
Carsten Miehling
