Moving Forward with Open Finance through APIs Implementation
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Moving Forward with Open Finance through APIs Implementation

February 28, 2022

According to a survey by the British research platform Merchant Machine, with more than 60% of their populations lacking access to banking, Morocco, Vietnam, Egypt, the Philippines, and Mexico occupy the top list of the world’s most unbanked nations. In Southeast Asia, according to Bank of Indonesia, 91,3 million Indonesians lacked a bank account in 2022. Indonesia has a population of 280,592,539 as of Wednesday, December 14, 2022, which means 32.5% or roughly one-third of Indonesians still remain 'unbanked' in 2022.

Financial service providers can better deliver on these opportunities with open finance. According to Forrester, the future of financial services lies in open finance. They said that data connectivity and interoperability within a cooperative environment would power this future. But we cannot talk about open finance without APIs.

What are APIs all about here?

Application programming interfaces, or APIs, simplify software development and innovation by enabling apps to exchange data and functionality easily and securely. In the context of APIs, the word Application refers to any software with a distinct function. An interface can be thought of as a contract of service between two applications. API allows companies to open up their applications’ data and functionality to external third-party developers and business partners, or to departments within their companies. This allows services and products to communicate with each other and leverage each other’s data and functionality through a documented interface.

Open finance and APIs: how are these two related?

Comparing open finance and APIs, what APIs is all about, and how are they related? We’ve heard about open banking before. Consider open finance as the development of open banking or the movement’s next phase. The framework and standards for the data-sharing model between banks and authorized third-party providers have been established by open banking.


With access to a greater variety of data sources, open finance expands on the data-sharing approach used in open banking. As a result, there will be deeper data sharing across a broader range of financial goods and services. The information comes from insurance firms, investment platforms, pension funds, and service suppliers like water and energy utilities.


Application programming interfaces (APIs) are the foundation of this change since they allow businesses to communicate financial data in almost real time. These APIs allow transactions that once required days or weeks to complete to happen in a matter of seconds.

Open finance is reshaping financial services in Indonesia

Indonesia’s payment system may change as a result of open finance. This advancement does not require payment gateways while offering a wider variety of payment and payout options by connecting multiple financial APIs directly, even though regulation is still in the early stages of development. For instance, BI reported a 30.44% increase in electronic money transactions year over year in December 2020.

How open finance helps Indonesia's unbanked

In helping Indonesia’s unbanked population, what are open finance APIs all about? The idea of open finance encourages more balanced pricing. Consumers can more easily evaluate the costs and features of similar financial goods because of enhanced openness between financial products such as insurance premiums and credit loans.


By examining a consumer’s credit and income data with open finance APIs, fintech businesses can more accurately assess their present financial status. This enables businesses to provide highly customized solutions to customers’ financial demands. Moreover, this gives Indonesia’s unbanked population access to financial goods they would not have previously had, thanks to open finance.

Support from regulatory bodies in Indonesia

OJK and BI are collaborating closely to support open APIs and open finance. What are APIs all about in this case? The National Payment Open API Standard, or SNAP, was developed by Bank Indonesia (BI) in August 2021 to simplify the integration of financial APIs. It is a standard collection of protocols and instructions that allow different APIs to work together to perform transactions.


While BI SNAP laws are still being developed, BI has already taken several measures to ease payment-related snags and obstacles in Indonesia. In response to public demand for quick, simple, and affordable methods, BI has developed BI FAST, a revolutionary real-time retail payment infrastructure. Additionally, OJK regulates firms that deal with digital payments, safeguards user-shared data, and ensures that OJK has examined all systems accepting digital payments.

While many Indonesians lack access to essential financial services like bank accounts, hundreds of millions of people are embracing new digital services. However, small firms, in particular, may find it challenging to incorporate these open banking services into their operations because doing so can be expensive and time-consuming.


The API-led strategy used by Ayoconnect in Indonesia shows how quickly open finance might advance in such situations and ecosystems. You might be wondering what APIs are all about, and Ayoconnect as open finance platform has the answer for you. Choose one of Ayoconnect’s open finance  API solutions now and enjoy the open finance in the palm of your hand and participated to accelerate financial inclusion in Indonesia.