Open Banking in Romania: A Critical Look at Banks' API

After over three years since the adoption of Payment Service Directive 2 (PSD2) legislation in Romania, we are finally witnessing a growing momentum in the local Open Banking ecosystem, with more and more companies building such solutions for their end-users.

Therefore, it is crucial for this momentum to be sustained by banks and Third Party Providers (TPPs) with services as reliable and as intuitive as possible.

Being the cornerstone for this whole ecosystem, the user experience offered by the banks is particularly determinant for Open Banking adoption by Payment Services Users (PSU) and, consequently, by the market.

When we talk about quality of the Open Banking services offered by the banks, we are considering:

• the quality of the API themselves, in terms of security, availability and performance;
• the associated authorization process for payment initiation and access to account;
• the features exposed through API channel.

While last year’s Digital Banking Scorecard evaluated banks based on the way they consume (or not) other banks’ APIs, we are now taking a more critical look at the quality, availability and performance of their own as banks’ contribution from this perspective is far more determinant for the evolution of the Open Banking market.

To do so, we have considered the following additional criteria:

• API Availability – general consumers’ expectation is that online services are available without interruptions, any downtime generating dissatisfaction and abandonment;
• API Performance - general consumers’ expectation is that transition from one process step to the next takes less than 3 seconds, any delay in API response times leading, again, to dissatisfaction and abandonment;
• Authentication with biometrics – being able to authenticate using biometrics on your mobile phone shortens and smoothens the user flows by eliminating the need to remember usernames and passwords;
• Instant payments – for some industries such as commerce (e-commerce but also traditional) it is crucial to have an instant payment confirmation in order to proceed with shipping the goods;
• Bulk payments – being able to initiate payments in batches, with a single authorization, is a mandatory requirement for companies which are initiating many payments at a time (salaries, suppliers, etc.).

In our assessment, we are happy to see that some banks are actively contributing to Open Banking adoption by constantly improving their API, including associated applications and processes, and by offering more features through the API channel than the bare minimum legal requirements.

Although I am still hearing in the market that some banks are not paying too much attention to Open Banking because there is no relevant adoption from consumers, the leading banks in the digital space understood that high-quality services are needed first to generate adoption and they act accordingly, especially in regard to user experience.

And, as the whole Open Banking community has still a long way to go to reach the market true potential, what I would like to see next is the banks putting more efforts into:

• closing the gap between the features offered through API and through the ‘traditional’ Internet & Mobile Banking systems, as it is required by PSD2 and expected by the ecosystem;
• offering, through call centers / support lines, a better level of support for their customer facing Open Banking related issues.

Smart Fintech and IT Smart Systems will continue to monitor the progress of the overall Open Banking ecosystem and, in particular, the quality of the services offered by the banks also in terms of:

• coherence and completeness of the API data;
• documentation and support offered to TPP;
• following the change management required procedures.
• the quality of customer support offered through call centres / support lines for Open Banking related issues;

For over one year now, IT Smart Systems has been monitoring the availability and performance of APIs exposed by banks. Its SmartPG Monitor solution is being used by several major banks, including the National Bank of Romania (NBR), for fulfilling its market overseeing responsibilities. In alliance with Smart Fintech, the first Romanian Third Party Provider authorized by NBR, we have constantly been working for the past years with banks and fintechs to nurture and promote Open Banking in Romania.