Open Banking Case Study: J.P. Morgan Treasury Services
As J.P. Morgan is stating on their website, “Open Banking is a loosely defined term that means different things to different people. In the US and Asia, open banking typically refers to a broad set of API-based connectivity that allows greater sharing of account and balance information. The most common application of open banking is account aggregation via API where providers give their clients access to accounts held with multiple banks with one simple log-in. In Europe, open banking is increasingly associated with specific aspects of the Second Payment Services Directive (PSD2) including payment initiation (PISP) and account information (AISP) services. In both instances, APIs play a critical role.”
On the Corporate Banking side, J.P. Morgan had brought in Sairam Rangachari as the Global Head of Open Banking & API Strategy for Treasury Services at the end of 2017, internally launched their Open Banking initiative in April 2018, and externally to clients in August. So far, the team has made available about 25 Application Programming Interfaces (APIs) for their Corporate Treasury customers, including the following.
While there are clearly aspects of regulatory compliance to the API initiative, and change in the core banking infrastructure is also being driven elsewhere (e.g. JPM Coin, and Quorum as a fork from the Ethereum blockchain), our conversation with Rangachari focused primarily on an improved user experience and value creation. The Corporate Open Banking initiative looks at three implementation vectors:
- Build APIs as customer and third-party endpoints
In order to enable digital transformation of the treasury function, the main objectives here are real-time visibility into payments, end-to-end payments automation, entitlement management and receivables reconciliation. - Allow broad API access through a developer portal
The inventory of available APIs, testing and code generation tools are available from the J.P. Morgan developer portal. - Leverage technology partnerships
Recognizing the standard applications available to corporate treasurers, J.P. Morgan has released three apps on the SAP ERP platform that are available on ECC 6.0 and Hana (implementations for Oracle, Microsoft Dynamics and Netsuite are on the roadmap); similarly, and integration with Kyriba as a treasury management software is available, and further partnerships planned (e.g., FIS and ION, which owns a whole portfolio of treasury solutions); lastly, collaborations with innovative fintech companies are important, too — Trovata, which provides cloud-based cash forecasting, is one of the first startups on the platform, and has received seed funding from J.P. Morgan as well.
Asked about API standardization, Rangachari referred to a number of global initiatives currently under way, such as the UK Open Banking Standards, the Berlin Group, as well as initiatives by the Hong Kong Monetary Authority and in Australia, however, global, even regional standardization seems way off at this point, making the whole playing field rather messy, and opening the door for service providers such as Token who insulate third party from the different implementations currently pursued by financial institutions. These are merely the first steps in open banking, comparable to email being the first application on the internet, and we will see a number of new business models evolving over the coming years. This is a space to watch.
We have previously covered Open Banking & Open APIs in Japan.
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