SWIFT, a financial messaging services provider, has published a new API standard for the pre-authorisation of funds in a bid to enable further innovation in the financial services sector through open banking.
The new API standard will allow a payer’s bank to designate funds for a purchase in advance, thereby making sure that the future payment will be honoured, said the global member-owned cooperative.
SWIFT Standards head Stephen Lindsay said: “SWIFT is uniquely positioned to tackle the problem of fragmentation in standards globally and we are pleased to expand our current role to include the global standardisation of open banking APIs.
“Our work on the pre-authorisation of funds API is another example of the central part we are playing in ensuring the industry can make the most of the new open banking landscape.”
According to the company, API standards play a key role in open banking as they help accelerate the launch of new services while decreasing incremental investment.
The company said that if each bank provides a distinct API, fintechs and merchants have to adapt to different data structures, workflows and security considerations for each one. This will add complexity, cost and also time for implementation, said the financial messaging services provider.
Citi treasury and trade solutions managing director Tony McLaughlin said: “The SWIFT pre-authorisation API is further validation that banks, fintechs and merchants can collaborate to build Open Banking APIs that go beyond the regulatory minimums to support vitally important use-cases.
“The global banking community must come together to provide the full suite of retail and wholesale banking APIs so that we can provide the financial layer of the digital economy. The world of platforms provides unlimited new opportunities for banks if they adopt an ‘API first’ mindset.”
Available for API developers to adopt and use, the new pre-authorisation standard is the second open banking extensions API standard for SWIFT.
SWIFT pre-authorisation API joins the Pay Later API standard
In January 2019, the company published a Pay Later API standard, which will enable instant loan approval flow between banks and retailers. The model provides consumers an innovative and flexible payment option when completing purchases on the internet, said the company.
