The Bank for International Settlements (BIS) is launching Project Aperta to explore how to reduce frictions and costs in global finance by enabling seamless cross-border data portability.

The project aims to connect the domestic open finance infrastructures of different jurisdictions. The initial use case to be explored is in trade finance for small and medium-sized enterprises, with many more applications to follow according to the developers.

L/C challenges

Businesses engaged in trade finance face numerous challenges when using financial products that facilitate trade, such as letters of credit (L/Cs), trade credit insurance and supply chain financing, according to BIS.

It says that processes are often inefficient and costly due to excessive manual paperwork and a lack of digital data portability. Digitalising trade finance however can promote sustainable economic growth and support financial stability, contributing to the overall resilience of the global financial system.

Cross-border disparities

Around 70 jurisdictions currently regulate open finance through various approaches, often operating with differing domestic standards and protocols, preventing the smooth flow of data across borders.

But according to BIS, technologies based on proven application programming interfaces (APIs) have the potential to significantly enhance cross-border data portability via these existing ecosystems.

What is Aperta?

Project Aperta aims to play a pivotal role by bridging the gaps between domestic standards by providing a prototype of a multilateral cross-border interoperability network that connects the domestic open finance infrastructures of different jurisdictions.

This should enable consumer-consented, safe, secure and end-to-end encrypted financial data to be shared via APIs, in turn allowing financial institutions and third-party providers to establish mutual trust across borders and exchange data within an end-to-end trusted environment.

How does Aperta work?

Aperta aims to provide an innovative mechanism for global interoperability, offering harmonised features, functionalities, use cases, security protocols, operating procedures and trust frameworks for open finance across jurisdictions.

In its current phase, the participating jurisdictions include the UAE, UK, Brazil and Hong Kong, all of which have varying approaches to open finance.

Cross-border connectivity

The multilateral nature of Project Aperta will enable a licensed third-party provider - such as a bank, fintech or other financial institution - in one jurisdiction to seamlessly connect with third-party providers in other jurisdictions.

This will facilitate the exchange of information such as L/Cs, payment and account data, or electronic bills of lading.

More details on Project Aperta can be found here.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.