The wealth management industry is often seen as slow to move with the times. Not so in Switzerland, the OpenWealth industry association has at its heart the desire to drive efficiency and enable new business models by creating a set of standards to facilitate the transfer of data in an open finance ecosystem.
Raphael Bianchi, President of the OpenWealth Association (OWA) and Synpulse CEO in Switzerland explains: “The purpose of OpenWealth is to find and define an open API-based industry standard in our community of industry-experts for everything that relates to open banking within the wealth management space. Beginning in Switzerland and, in a second step, then continuing to distribute it internationally. Our purpose is to define, distribute and then foremost foster the implementation of the standard. We are creating the basis for an ecosystem. Our community of experts all want to create a common standard for the financial services industry and lay the foundation for a true open finance environment that goes beyond mere open banking limited to providing access to account.”
Indeed, data, its management, storage and journey through disparate internal silos and third-parties has long since been an issue. But with digitization now commonplace and heightened demand to be able to share and use third-party data within an open finance ecosystem model then the task takes on urgency
A key step is the creation of industry standards. The OpenWealth Association’s vision is to define, maintain and operationalize the Open API standard for a global wealth management community. Its focus to begin with is custody services with an API for position and transaction data, as well as customer management including know-your-customer (KYC) data shared between external asset manager’s software providers, like portfolio or customer management systems, and custody banks.
“This was started because our clients at Synpulse were looking for an option to opening up their interfaces in their wealth management sector. But at the time open API standards were limited to things like payments and access-to-account, known from PSD2 but completely missing for wealth management. By building up a community within the industry to collaboratively work on a standard, not only ensures the practical orientation of the standard, but also increases the chances that the standard will be accepted,” Bianchi says.
For wealth managers, family offices and asset managers, keeping track and control of assets is crucial – all the more so when markets are volatile. If managers have the means to make instant decisions or track strategic and tactical asset allocation then they are in control. And for smaller family offices having the means to move away from manual asset aggregation in Excel, results in more efficiency and lower operational costs. It’s a game-changer.
“We are also liaising with the regulator and keeping them abreast of what we are discussing and proposing to do with the aim of the market working together and having a consensus approach that works for us all. This makes things more fit for purpose as it will have been designed by those who are using it and it also makes it more cost-efficient too,” says Bianchi.
The first version of the APIs has already been made public and already implemented at some members.
"The current version of the standard define the means to read customer data including KYC data and make sure that the data between asset manager and custodian bank are in sync. For the portfolio management system, the API standard is set to read position data including valuation, and transaction data for end of day reconciliation as well as in or near real-time. For securities it places orders and check their status within the systems of third-party providers. This is for stocks, bonds and funds,” says Bianchi.
“We are working on a second release too. We are extending the customer data management API to provide the functionality for customer onboarding and life-cycle management by bringing together customer data, KYC and respective documentation,” he adds.
“It is all around different systems being able to talk to each other and understand each other’s data sets,” he says.
Within Switzerland, OpenWealth has been very well received and includes financial institutions, WealthTechs and other service providers. The list of current members is long: Credit Suisse, LGT Bank, St.Galler Kantonalbank, Zürcher Kantonalbank, VP Bank, SIX, Alphasys, Assetmax, Etops, Wealtharc, OnePM, ndgit, Investment Navigator, Infront, Aixigo, PSplus, Divizend, Altoo, Luxhub, Nextway, bmpi, Indigita, United Signals, CSL Corporate Services, m2Wealth, Investify Tech, InvestSuite, PSS, 3rd-eyes analytics, Ecofin, Synpulse. The growth has been accelerated by the support of the Swiss Banking Association (SBA) and Swiss Fintech Innovations (SFTI).
A very recent development has been the partnership with the recently created Blockchain Association for Finance (BAF). “Here we are working on the establishment of compliance data standards to facilitate exchanges between financial actors. The focus is to implement a common KYC standard and support its adoption by the financial sector but we will also collaborate on each other’s existing standards,” says Bianchi. Indeed, the implementation of the KY-EAM and KYTrustee developed by the BAF through the Wecan Comply solution will be considered when developing the APIs. The OWA KYC and customer onboarding API is currently in specification phase and is planned to be published in Q1 2022.
Worldwide interest
Not only has OpenWealth potential to develop into a central piece in the ecosystem of custodian banks, independent asset managers and WealthTech providers within Switzerland, it is also getting interest from outside of Switzerland with companies in Germany, Austria, Lichtenstein too. “We see Luxembourg and Hong Kong and Singapore as most likely to use our standards in the near future but, as awareness grows, it is likely that take up both within the country and elsewhere will improve,” says Raphael Bianchi.
“Going forward we are looking to deliver data as a service and open up new business models and enable additional use cases, adding on other members of our community,” he says.
“We see that banks are undergoing cultural change and accepting the benefits of opening up and as that happens, we want the means and the standards to make it easy to do so. We standardize by consensus and we enable the industry to move forward,” Bianchi concludes.
This article was part of The Wealth Mosaic's Swiss WealthTech Landscape Report (2021). Access the full report here.
