Are Open APIs the Gateway to New Cores?

Open APIs have been advancing steadily across the banking landscape for a number of years, though just how “open” may be a point of conjecture. Many of the European neobanks have done it, such as Monzo and Fidor, and in Europe, where PSD2 is set to take effect next year, the issue is especially pressing.

In the U.S. there is no such urgency, though banks such as Silicon Valley Bank, Capital One, Citigroup, and BBVA Compass have made advances. Vendors are stepping up their offerings in this area too, to help banks interface with fintechs and share customer data safely and securely. Last month, Austin, Texas-based Q2 Holdings released a suite of products called Q2 Open, described as “four services consumed through open APIs, which allow development-capable organizations to build front-end interfaces and experiences on top of Q2 Open’s existing technology infrastructure.”

A new startup called Finxact is going all in on open banking, and is even releasing a new core via API. Finxact is offering this functionality through its sandbox, and invites interested FIs to work with the sandbox at no cost. “It’a a platform like Salesforce,” CTO Jim Joyce told Bank Innovation. “Come build a product in our sandbox.” This is a new set of technology we’re building on top of a completely new stack,” said Joyce, who joined Finxact from Zenbanx, acquired by SoFi in February.

Modern cores enable banks to engage in realtime transactions and seamlessly share customer information internally. The APIs allow that data to be released in controlled fashion to external partners as well. Cloud-based cores such as Finxact’s may be a lightweight way for banks tied to legacy cores (which is all of them) to play with this future technology. But so far new core vednors like Nymbus, despite promising teach and ample funding, are selling slowly, and have yet to announce a large win.

Finxact’s open core API launched in private beta in early June, and was made public today.

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Philip Ryan is Senior Editor of Bank Innovation and Senior Director of INV Fintech. He began covering financial services in 2012 and has more than 15 years' experience in online journalism, which makes him quite old. He can be reached at pryan@royalmedia.com.

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