In our previous blogs we looked at how an API program can drive your broader digital strategy and the key questions that your company should answer in order to be successful with the program. In this blog we will illustrate the above through the example of Open Banking, drawing upon our expertise from both the Uk and Australia.
Open Banking, or the Consumer Data Right (CDR) in Australia, is effectively a regulator mandated API program, which seeks to establish a value network of financial service companies exchanging information and transactions via APIs in order to stimulate the kind of innovation we have seen in sectors such as travel and retail. Open Banking has obvious benefits for consumers including seamless switching (similar to how easy it is now to port a mobile phone number), increased financial awareness of both their financial health and the products and services available in market, and insight into who has their data and obligations on banks to store it securely and share it only at the direction of the customer. Less obvious are the opportunities for banks and fintechs in cross selling (telco and energy markets will also be part of the CDR framework), new revenue streams, operational efficiency and innovation. Who better placed to sell you a new mobile plan than your bank who understands all of your spending patterns and can scan the market for the best deal before SMSing you not only an offer for a more competitive plan but has the infrastructure and data to complete the switch in less than a minute with no more than 3 clicks from the customer.
An API blueprint to execute on the opportunity above will consist of the following:
Compliance: It goes without saying that the starting point for our customers to meet their legislative obligations. This means developing APIs to access their financial products and dealing with technical issues such as identity and consent management.
Grow engagement through successful partnerships with developers and third parties. Many of our customers have already built developer portals and sandboxes to enable open and controlled access to their products – this is a gateway to monetisation and evolving into a marketplace model. Aside from the quality of your API’s, engaging and supporting developers is critical for successful adoption of your API’s. Some of the capabilities that our customers will need to consider include accreditation and trading, open forums for collaboration and the ability to track agreements and API usage.
People and culture impact: the real and immediate opportunity for Banks is to be able to leverage open banking data to start driving efficiencies in their current processes and reducing costs. Once you have immediate access to a customer’s financial information, you leverage automation and AI to drive efficiencies in your current processes. Why pay for Mortgage Brokers or Financial Planners to collate customer information when this can be read from an API?
New customer and partner experiences: new partnerships with members of the value exchange, such as the ability to initiate a loan from a property buying website, banking-as-a-service models, and the cross-selling mentioned earlier.
Once the blueprint is agreed the API vision will need to be agreed and socialised. This will involve questions such as what role do you wish to play in the open data ecosystem? Do you want to own the customer experience, focus on product manufacturing or both? Is your Open Banking Team aligned with your Customer and Partner Strategy? How can Open Banking Drive internal efficiencies in your business? Rather than focusing on compliance or additional revenue streams there are opportunities for significant cost savings through data ingestion and automation. What are the opportunities available to you today to drive savings in your business? The answer to these questions will impact the number of APi’s your organisation will both produce and consume and the criticality they will have to your business. Are you seeking to be a utility provider with an unchanged business model (think glorified white-labelling)? Does your organisation see itself as a digital leader, owning the relationship with the customer? Or is there an opportunity to become a platform player, the Amazon of financial services with a marketplace that sells competitor products alongside their own, for a fee of course.
These decisions will require both a change to the operating model of your organisation- APIs will become as critical to doing business as a branch today or a mobile platform; as well as an organisation aligned to an approach that these banking services will be exposed to third-parties, rather than just internal staff. If this sounds daunting, in the next blog we will explore how a low-code/no-code approach can unlock the potential in your organisation.