We are often asked if what we are doing is open banking.  The term open banking is not an entirely accurate reflection of what we’re doing and it means different things in different jurisdictions.

Open banking has become the blanket term internationally for a series of initiatives which can be regulatory-led, co-led or market-led to allow customers greater access to and use of their own banking data. What we’re doing is not open banking as conceived in the UK or Australia, but we’re working towards similar outcomes as these jurisdictions, namely having the ability to interface third party and bank services at the request of a customer.  

We talk about “open APIs” rather than open banking because the industry’s focus is currently on standardising payment-related APIs – the engine room that can drive more openness in banking. However, this is just one aspect of what we’re working on with the industry.

More broadly, we’re working on several initiatives through the Payments Direction programme to deliver the desired payments ecosystem of the future for Kiwis.

Over the past year we have worked with the industry to develop a shared framework for common payment related API standards. A framework for standardised APIs allows banks and third parties to partner in a safe, simple and predictable way.

This simplified partnering creates a broader network of organisations able to offer new and innovative solutions to the market, which means Kiwis will be able to have more choice and better personalised service offerings. Since March this year we have been running a pilot with our development partners to develop and test two of these standardised APIs.

We are developing two standardised APIs as part of the pilot.  They are the 'Account Information API' and 'Payment Initiation API'.  These APIs cover a range of payments functionality.

The account information API supports three main functions:

  • Account Balance: Third Parties can access an account balance and available funds. 
  • Verify bank account number: Verify the fidelity of a bank account number provided by a customer.
  • Verify account holder name: Verify the account holder name that belongs to a bank account number.

The Payment Initiation API initiates an electronic credit transaction from one account to another account.  Both of these pilot APIs require customers to provide full consent as part of completing a transaction.

We’ve also recently started work on developing a third API for consent management which will complement the initial two standards. 

‘Draft’ means the two standards are still under development and may change up until their final release, which we’ll let you know about in due course. While you’ll be able to get a working view into the "nuts and bolts" of these draft APIs as they currently stand, the draft standards must not be relied upon when assessing commercial arrangements and decisions as they are subject to change. 

You can request access to the draft standards by filling out the request form on our website.

A standards body is a vital function in a standardised API environment. It manages centralised activities to support the deployment and use of the common APIs such as access, vetting, on boarding, policy and guidelines, development lifecycle and certificate management. We’re currently developing the framework for an API service (standards body) and this service is likely to sit within our organisation.

You can find out more about our API pilot and framework by visiting the Payments Direction API page.