Work

Open data and API adoption of U.S. banks

Year: 2025

Type: article

Abstract: Bank adoption of external application programming interfaces (APIs) enables bank customers to share their data more efficiently and securely with other third-party financial institutions and FinTechs, thus enabling open banking and bank data portability. Analyzing determinants of API adoption by U.S. banks from 2007 to 2022, we show that banks that adopt APIs tend to face lower competitive pressure and are less capital-intensive. Banks that adopt APIs experience an increase in Return on Assets (ROA) and Tobin’s Q and a decrease in loan loss provisions, particularly after President Biden’s executive order that encouraged greater bank data portability. We find that APIs’ ability to facilitate data access and sharing improves bank information flows and supports banks’ loan and deposit services which form the foundation of notable improvements in bank performance. Overall, our results on the determinants and implications of API adoption have important policy implications for the discussion on open banking regulation and bank data portability.

Source: Journal of Financial Intermediation

DOI: 10.1016/j.jfi.2025.101162

Authors: Xiangyu Lin, S. Sarah Zhang, Markos Zachariadis

Institutions: Nankai University, University of Manchester

Language: English

Topic: FinTech, Crowdfunding, Digital Finance

Subfield: Management Information Systems

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $3,960

Funder: British Academy of Management