‘Banking outside’ the next big move for lenders

Open banking – it sounds like a contradiction for an industry defined by rigourous protection of valuable client data.

But the next wave of innovation at banks could crack open the traditional bank account and spread the data and banking services across the web.

The technology that is making it possible has been around for more than a decade. Only in the past year or so, however, have banks been brave enough to take it up.

The driver is called an application programming interface, or API. It’s an interface that streamlines the data from multiple sources into one place where the information can interact meaningfully.

One of the best examples of a public API is Cityscanner, which brings together a multiplicity of taxi, bus and subway information onto one app and gives users a glance at what might be the fastest and cheapest way to get across town. As of August, the app could even tell users which carriage on the London underground would position them best when they arrived at their destination station.

Now upload bank data into the equation: open bank APIs could let consumers hook up third-party apps to their bank accounts in a secure way, explained Tom Robinson, chief operations officer at Elliptic, an insured bitcoin custodian based in London.