For Society

Raising the bar of financial transparency

The Open Bank Project is a technological project with social aims. It is a contribution from the technical, web 2.0, open source community to solve one of the largest problems talked about: corruption.

Corruption is a worm in the apple of democracy! It distorts markets and competition, it breeds cynicism, undermines the rule of law, damages government legitimacy and hurts the integrity of the private sector. (See “Long war against corruption” by Ben W. Heineman, Jr., and Fritz Heimann) Through corruption, over €30 billion a year are lost. Eric M. Uslaner describes the vicious cycle as follows: inequality, distrust and information deficit that leads to corruption and back around again.

So we thought: If we replace the information deficit with timely transparency and if we empower the public rather than letting them become distrustful, that would be good for democracy and all good for all for us because democracy is good for all of us. That’s how the original Open Bank idea was born: a bank where all accounts are open to see.

But to make it realistic, financial privacy doesn’t need to be on or off. Account holders can choose financial privacy and disclosure settings appropriate to the situation. For instance, a company can open up data internally or to shareholders, a charity can open her accounts to her donors, or individuals could give read only access to their accountant or another bank if they want to get a loan.

In order to make this technically possible, we developed an open source API that allows banks to make these applications available to it's customers at low cost to the bank. An API (application programming interface) is a technical layer that sits on top of any bank allowing the applications to securely interact with the bank. It is very secure because when using these applications you always log into the bank directly. Neither the applications nor the API see your login passwords. Being open source, anybody can use it as long as they contribute their changes back to the community or pay us or our partners a commercial license, which is how we make this project financially sustainable. By breaking the local monopoly of software, we foster innovation because external developers come up with ideas that banks wouldn't focus on by themselves.

In conclusion, the Open Bank Project promotes both financial transparency and security by engaging public vigilance, the open source principle of “many eyes”. Financial transparency discourages and displaces corruption and increases our confidence in organizations and financial institutions. See for example The Social Finance application and the Money Journey application. Last but not least, it enables more enjoyable and productive ways to access personal and business bank accounts. See for example Moneygarden and the Singing Bank.

More of the apps developed by our community are here.