AI & Open Banking: APIs are the real innovation driver in the financial sector today

What began as a regulatory-driven standard for the secure exchange of bank customer data has developed into a driver of innovation in the financial sector with the Payment Services Directive 2 (PSD2), which goes far beyond mere compliance requirements. Open Finance as the next step can bring together a wide range of information: from account balances to insurance and investment portfolios to patterns in payment behaviour.

At the end of this maturing process is the vision of open data, a seamlessly networked data landscape in which a wide variety of information can be analysed across industry boundaries. For this to work, the individual systems must work together seamlessly. Uniform application programming interfaces (APIs) are not just a matter of technical compatibility; standardised data formats create the basis for flexibly scalable AI models in the first place. Payment service providers support banks in implementing such interfaces, which are PSD2-compliant and offer additional functionalities for innovative financial products.

APIs as the backbone of modern financial services

The importance of standardised APIs for today's financial system can hardly be overestimated:

•  APIs form the technological foundation for secure and efficient data exchange between the various players in the financial ecosystem.
• APIs make it possible to use structured data from both external and internal sources and to develop innovative applications.

As important as this standardisation is, the technical implementation is anything but simple. Only when APIs work together perfectly with the individual systems a real network can be created. And this forms the basis for the widespread use of AI models in the financial sector as we see it today.

AI as the key to more advanced financial offerings

But how can the huge potential of AI be best exploited? A key point here is the synergy between machine learning algorithms and networked data infrastructures. Take fraud detection, for example: predictive models benefit enormously from real-time data streams provided via open banking interfaces. Innovative payment solutions use this technology to check transactions for anomalies in real time and identify potential cases of fraud even before they are completed. An invaluable advantage, not only for banks, but also for their customers.

Individual risk assessment in the credit sector also benefits from this depth of data: instead of relying on traditional scoring methods, algorithms now analyse current payment behaviour - even across different accounts. This makes it possible to accurately assess creditworthiness and enables financial institutions to offer customised products that are precisely tailored to the customer's needs.

Between the spirit of innovation and regulatory requirements

Despite the immense potential of AI-driven transformation, companies must not ignore the associated challenges:

• The protection of sensitive customer data and data security: Financial institutions must implement robust security architectures to ensure that data processing always complies with applicable data protection regulations.
• Particularly in the heavily regulated financial sector, the results generated by AI systems must be transparent and comprehensible in order to meet compliance requirements and gain the trust of customers.

Despite the challenges mentioned, the opportunities offered by this development outweigh the risks. With AI-based solutions, financial institutions can, for example:

• Optimise processes
• Reduce costs
• Create personalised offers
• Develop completely new business models.

The ability to analyse large volumes of data in real time and gain valuable insights from it creates competitive advantages and strengthens customer loyalty.

Conclusion: Entering a new era of financial services

The fusion of open banking and artificial intelligence is one of the biggest developments in the financial sector. Standardised data interfaces create the necessary basis for the use of powerful AI models - and these have the potential to fundamentally improve the customer experience, increase efficiency and turn completely new product ideas into reality. Financial institutions that recognise this development early on and set the necessary technological and organisational course will be able to position themselves successfully in this dynamic environment. The future of the financial sector is networked, data-driven and intelligent - and it is up to the players to take advantage of the resulting opportunities.