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Money20/20 Preview: The Business of APIs – Compliance Comes to Technology

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Pulling everything together, we have a drive for Open Banking from consumers; we have a proposed and expected legislation for Open Banking in the USA from the Consumer Financial Protection Bureau (CFPB); and we have an API Standard from FDX, who we assume will be a Standards Setting Body.

But what does it mean when the regulatory rubber meets the engineering road?

Why Having a Compliance Tool Really Matters

Let’s start with the CFPB’s 1033 rule. This regulation sets the standards for how APIs should operate, from their overall quality to the security of the services they provide. More importantly, it defines what a standards-setting body (SSB) requires, and in the US, we’re probably looking at the FDX (Financial Data Exchange) standard. So, if you’re dealing with financial APIs, this is something you can’t afford to ignore.

Now, if the US regulatory approach follows its usual ‘lighter touch,’ we’re not talking about a full-on Brazilian-style top down approach. Instead, certification might happen once a year or with each major release. Sounds manageable, right? Well, not exactly. Certification is one thing, but that doesn’t mean you’re in the clear for the rest of the year. Being compliant at one point in time doesn’t mean you’re compliant forever. Continuous monitoring and validation are key because compliance isn’t static—it evolves.

The Hidden Costs of Compliance: More Than You Think

Here’s where things get tricky—and expensive. Compliance isn’t just about getting certified; it’s about staying compliant. Monthly reporting is a huge burden, especially if you look at the experience of the UK sector. Reporting isn’t just difficult; it’s costly and time-consuming. If you think you can handle all this manually, brace yourself for a shock. The 1033 rule estimates that keeping up with the requirements could cost businesses tens of thousands of dollars per year—and that’s probably a lowball estimate.

And let’s not forget that you’re juggling three major things: keeping things running, staying compliant, and meeting performance requirements. That’s a lot to manage without a solid strategy or the right tools in place.

Finally, the CFPB is expecting monthly reports on availability and performance of the services, another item that will come with a cost to the banks they don’t have to think about currently.

How APIContext Helps Simplify the Chaos

At APIContext, we’ve taken what we’ve learned from working in UK and European Open Banking and built a solution that takes the headache out of API compliance. We understand the balancing act between staying compliant and keeping things running smoothly, and that’s why we’ve designed an automated solution that takes care of the heavy lifting for you.

Our platform provides continuous, automated validation against the latest standards and specifications, so you’re not just compliant on the day of certification—you’re compliant every day. And, because we know reporting can be a huge time sink, we automate the delivery of Management Information (MI) reports. That means less manual work for your team, fewer opportunities for error, and a whole lot less stress.

In an ever-changing regulatory landscape, having a compliance tool isn’t just a ‘nice-to-have’—it’s an absolute must. As the 1033 rule and similar regulations continue to evolve, your business needs to keep up, and APIContext is here to help. We’re not just about checking boxes; we’re about making sure you can innovate while staying on the right side of compliance every step of the way.

 

 

David O’Neill is the COO of APIContext and has been working in the measurement of performance and compliance of banking APIs since the start of Open Banking. He is speaking at Money20/20 on the Panel “Are you ready for Open Banking” at Money 2020 at 9:45 Sunday October 27 2024 in Casanova 501-503.

Connect on LinkedIn or email to setup time to meet.

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