New Sustainable Fintech Business Models Created by Open Application Programming Interface Technology: A Case Study of Korea’s Open Banking Application Programming Interface Platform

Sangseung Oh, Gyongchan Chung and Keuntae Cho ()
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Sangseung Oh: Graduate School of Management of Technology, Sungkyunkwan University, 2066 Seobu-ro, Jangan-gu, Suwon 16419, Republic of Korea
Gyongchan Chung: Korea Financial Telecommunications & Clearings Institute, 432 Nonhyeon-ro, Gangnam-gu, Seoul 06220, Republic of Korea
Keuntae Cho: Graduate School of Management of Technology, Sungkyunkwan University, 2066 Seobu-ro, Jangan-gu, Suwon 16419, Republic of Korea

Sustainability, 2024, vol. 16, issue 16, 1-20

Abstract: Fintech facilitates financial inclusion by introducing new sustainable and accessible business models in developing countries. Open banking API technology is used by various fintech businesses in both developing and developed countries, with varying effects on financial markets. It changes the financial market distribution structure by separating financial product manufacturing and distribution and intensifying competition between traditional financial institutions and fintech companies. Fintech companies innovate by using this tool to create new business models. In December 2019, Korea established a standardized “open banking API platform”, sharing an interbank payment network with fintech companies. It has since shown explosive growth, surpassing the trading volume of the UK, the country that introduced open banking APIs for the first time. This study analyzes new business models fintech companies created using this API technology. Based on existing literature, statistics from the platform operator (the Korea Financial Telecommunications and Clearings Institute), and investigations of 30 Korean fintech mobile applications, this study analyzes new fintech business models that provide financial services using this platform. These companies create sustainable business models by combining multiple APIs. Four representative business models (simple funds transfer, simple payment, cross-border remittance, and asset management) are analyzed to reveal how fintech companies create business models with open APIs.

Keywords: open banking; open API; fintech; financial innovation; financial platform; payment infrastructure; business model innovation (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
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