“We can only succeed by working together”
Roger Wisler, head of open banking at Zürcher Kantonalbank and Chair of the Swiss Bankers Association’s Open Banking working group, gives us an overview of developments in his field in Switzerland over the past few months and what can be expected in the months ahead.
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Mr Wisler, there is a lot of talk about open finance in the industry. What exactly does it mean, and how important has it become for Switzerland?
Roger Wisler: Basically, open finance is all about offering customers new, digital innovations that link the data, functions and services of banks and financial service firms to those of other providers. Switzerland’s approach to open finance is market-driven. Industry organisations like the OpenWealth Association have therefore been set up to help in developing applications and standards. Time will tell if this is enough, but it is at least putting the Swiss financial industry under a certain amount of pressure to address the topic strategically.
What do you mean by that?
The Federal Council published a report on digital finance in February this year in which it sets out areas of action for the coming years and notes that it will closely monitor developments in open finance. The politicians are keen to build on Switzerland’s image as an international hub for innovative and sustainable financial services. In other words, the authorities expect the industry to keep delivering progress and results with open business models that take due account of customers’ and investors’ interests, as is the case in other financial centres.
What is the banks’ view?
Fundamentally positive. The Swiss Bankers Association believes that market-driven opening based on customer needs and clear use cases will deliver better, more sustainable results than an approach guided by regulation.
Can you give us some real-world examples of these use cases?
Imagine you want to buy a house or some other property. There are lots of websites these days to help you find the right one, but getting a firm mortgage offer is still a time-consuming process as a rule. Each individual financial institution will offer a personal consultation and its own specific quote. You need to provide all sorts of documents. Each institution will look carefully at both your finances and the property’s location and condition. What open banking can do here is make your bank account data available at your request to other companies that are involved in the process and possibly even forward them directly. At the same time, financial institutions can cooperate with property websites to place financing offers precisely where prospective customers need them.
Do you have any more examples?
Customers can ask for their account and transaction details to be shared with software solutions from third-party providers such as fintech and wealthtech firms, which already happens for financial software. With multibanking, banks can also integrate accounts with other banks into their own e-banking system on request. Expanding the scope to open finance rather than just open banking means that other types of financial institution like insurers and pension providers can come on board too.
Could you shed some more light on the multibanking approach?
Multibanking allows bank customers to manage accounts with multiple banks via a single platform, for example their main bank’s mobile banking app or e-banking system. Technically, it’s a use case of open banking in which application programming interfaces (APIs) are used to bring the various institutions’ data together efficiently. The scope of functions offered can vary and can include information on account balances and transactions as well as payment instructions for third-party accounts.
What will the industry do next in Switzerland?
The Institute of Financial Services Zug (IFZ) analysed the Swiss market in its Open Banking Study 2022. It conducted a survey of more than 30 retail banks, asking whether they had opened themselves up to third-party providers via their own APIs or were planning to do so in the next few years. The survey revealed that the majority of banks had already taken this step or were at least planning it. Things are moving forward. We’re also seeing this in the Swiss Bankers Association working group.
Innovation for its own sake does not sound like a recipe for success. Is there really a market for these new solutions? Do customers actually want them?
Yes, they do. Open banking business models enhance the customer experience. Many customers use financial services from multiple providers at once – for example banks, insurers, pension funds, fintechs and companies outside the financial sector. Linking these providers together in the same ecosystem adds value for customers by making it much easier for them to manage their overall finances.
What cooperations are already in place?
Quite a few. My employer, Zürcher Kantonalbank, is playing an active role in drafting API standards for the Swiss financial centre. Working groups within Swiss Fintech Innovations and the OpenWealth Association, meanwhile, are developing open finance use cases with a view to producing practicable solutions. We can only succeed if we all work together.
Let us conclude with the most important question from the customer’s point of view: how secure is this data sharing with third parties?
It’s very secure. The standard interfaces I mentioned, APIs, are already being used to manage actual customer data and share them with third parties in a controlled, secure and efficient manner. Employing the requisite technology to ensure that these data remain confidential and secure is paramount.
This interview arose from a blog post published by Zürcher Kantonalbank in October 2022 at www.zkb.ch/blog.)