Open API banking: A powerful trigger for the value chain revolution in Japan

Eiichiro Yanagawa
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Eiichiro Yanagawa: Senior Analyst in the Asian Financial Services Group, Celent, The Imperial Hotel Tower 13F 1-1-1 Uchisaiwai-cho, Chiyoda-ku, Tokyo 100-0011, Japan

Journal of Digital Banking, 2019, vol. 3, issue 4, 371-389

Abstract: This paper explores the concept of open application programming interfaces (APIs), which are drawing attention as innovative means of corporate collaboration and partnerships, and the possibilities of open banking enabled by the modularisation of systems and businesses using open APIs. APIs were once merely a manner of system development for highly competent software engineers. Today, the open API has become a business policy of outstanding business managers. In May 2017 the Japanese financial industry shifted to a new framework. The Amended Banking Act introduced a registration system for electronic settlement agency service providers and so-called third-party providers (TPPs) and announced policies of collaboration between banks and TPPs. Measures concerning the promotion of open innovation at banks eventually emerged as new regulations. This turned out to be a major shift in Japan’s financial regulations. API is a new communication path of information systems, but it could be misused. The outcome of discussions was a shift from the legacy screen scraping method to open APIs and token authentication. The open API will be a powerful trigger for the value chain revolution set to take place in the Japanese banking and financial services industry.

Keywords: application programming interfaces; APIs; open banking; modularisation; third-party providers; TPPs; electronic settlement agency service providers; ESASP; token authentication (search for similar items in EconPapers)
JEL-codes: E5 G2 (search for similar items in EconPapers)
Date: 2019
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