Ozone API, a UK-based fintech that runs a standards-based open API platform, said it has won a major contract with Open Banking Limited (OBL) to act as the official model bank provider for an updated UK open banking model.
The OBL model bank is seen by many within the banktech space as a critical testing ground for banks and financial institutions, enabling them to experiment with and refine their API implementations in a controlled and secure environment.
Application programming interface (API) platforms, such as the one run by Ozone, are often labelled “the digital backbone” of banking infrastructure as they offer a unified set of capabilities for developing and managing APIs to support a company’s API strategy.
Ozone API, which services software tools and expertise to a host of banks and financial institutions, made a name for itself in recent years by providing technology that delivers compliant open APIs, mostly to monetise open banking.
The OBL model bank serves as a vital resource for banks, fintechs, and other third party providers by providing a safe space to develop and test their APIs in alignment with the new OBLv4 standards, according to Huw Davies, the current chief executive officer of Ozone API.
Speaking exclusively to QA Financial, Davies explained that the model bank acts as a reference implementation of the Open Banking API standards.
“So in this case it acts as a reference implementation of the new v4.0 of the UK open banking standard. It can be accessed by any participant to help them with their building and testing,” he elaborated.
“Specifically for third party providers, it is an environment where they can build and test their integrations to the new standard in advance of any of the banks being live,” Davies added.
“Many of the banks use the model bank to help build and test their own TPP applications.”
– Huw Davies
“Since the open banking journey started in the UK we’ve seen hundreds of third party providers use the model bank to build and test their applications as each new version of the standard goes live,” he added.
“This way they have a much smoother transition as the banks start to upgrade their APIs to the new standards.”
For banks, the model bank can serve two purposes, Davies pointed out.
“It acts as a reference implementation and point of comparison as they update their own APIs in line with the new version of the standards. Particularly for the CMA9 who also need to go through conformance testing to certify that their APIs are in line with the standards. Many of the banks also operate as TPPs themselves and use the model bank to help build and test their own TPP applications,” he said.
Davies claimed Ozone API is the first provider to deliver fully compliant APIs, facilitating the transition for financial institutions and third-party providers operating in the UK.
New standards
The agreement comes as OBL is planning to launch version 4.0 of its UK open banking standards this year.
These latest standards, known as OBLv4, are the first major update since the introduction of variable recurring payments, or VRPs.
The changes were announced by OBL in early July. OBLv4 introduces some mandatory updates for the UK’s CMA9 banks, with some required to be completed by as early as December 31 of this year.
The CMA9 banks are the nine largest banks and building societies in the UK, based on the volume of personal and business current accounts. They are Allied Irish Bank, Bank of Ireland, Barclays, Danske Bank, HSBC UK Bank, Lloyds Banking Group, Nationwide Building Society, NatWest Group and Santander.
In addition, ISO 20022 is set for implementation by March 31, next year, alongside the Bank of England’s publication of mandatory updates to payment regulations.
These proposed changes have been driven by several factors, including the deprecation of key security standards such as FAPI 1 Implementers Draft 2.
While the UK open banking standard was initially mandated just for the CMA9 banks, it has become the de facto standard for the UK market.
However, many UK banks remain on old versions of the standard.
For Davies, implementing the high-quality API changes, ahead of the first legislative deadlines coming into force later this year, is his top priority.
“Ensuring a smooth transition to the updated standards is critical for banking players who want to stay at the forefront of open banking industry changes into 2025 and beyond,” he said.
Davies added that Ozone API has launched a guide and a series of educational resources to accompany the new OBLv4 standards, aimed at helping banks and other financial services firms navigate the changes.
Since the UK Government announced it would revisit the Data Protection and Digital Information Bill in July 2024, it is anticipated that the UK will see more regulatory changes related to open banking, smart data and the open data economy.
Ozone API is also supporting banks in the US market this year, following the US Government announcing new open banking legislation regulations under Section 1033 of the Dodd-Frank Act.
CRIF partnership
It is the second time this month that Ozone API attracts wide attention within the industry after Credit Bureau Reporting and Business Information (CRIF), a global company specializing in credit bureau reporting & business information systems, analytics, outsourcing and processing services, said two weeks ago it was teaming up with the British startup.
Ozone API said its collaboration with CRIF is focused on supporting financial institutions to “securely expose their data and create a comprehensive suite of financial solutions that address their evolving needs.”
“The primary objectives of the collaboration include enhancing data-driven decision making, streamlining banking operations and improving customer satisfaction,” the companies clarified in an emailed statement.
“The deal will enable CRIF and Ozone API to offer innovative, secure and efficient financial services, ensuring a competitive edge in the market for our clients,” stressed Andrea Martellone, digital platform business development & ecosystem Strategy Senior Director at CRIF.
The partnership between CRIF and Ozone API is driven by “a shared vision of transforming the financial services landscape through collaboration and innovation,” he said.
By integrating their respective strengths, both companies aim to provide comprehensive solutions that meet the diverse and evolving needs of financial institutions, Martellone added.
“We are combining our strengths to create a seamless and efficient banking experience. This collaboration aligns perfectly with our mission to innovate and provide advanced solutions that drive growth in the financial sector.”
In addition, James Bushby, Ozone API global partnership lead, said that “this [agreement] will help drive financial inclusion by providing the right tools to financial institutions to allow their customers to make more informed decisions about their financial wellbeing and get access to a wider range of financial services.”
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