It’s time to get your apis and micro-services into shape


It’s time to get your apis and micro-services into shape

Application Programing Interfaces or APIs, have been around for decades. The difference Daniel Nilsson writes, is not just that the zeitgeist of customer-centricity and the increasingly blurry consumer-driven and business-provider world, is at everyone’s fingertips, as well as on everyone’s lips, it’s that the imminent arrival of open banking and the spread of data-sharing are making it happen.

Launching the Marketplace Bank

Imagine this scenario… The new Marketplace Bank has just launched its services in your area. The bank has adopted open banking, and built its business model around a ser- vice that acts as a gateway to yours (and everyone else’s) APIs, with minimal banking infrastructure.

Customers can now mix and match products from the entire financial services ecosystem, and manage the products on offer through a single easy-to-use interface. Marketplace Bank offers services including a highly popular personal finance management tool that provides an overview of the customer’s full financial position, as well as easy access to all the customer’s transactions.

By underpinning its marketplace with a set of APIs, Marketplace Bank also seamlessly integrates with a number of leading fintechs, giving its customers direct access to a host of new, innovative offerings. Because Marketplace Bank doesn’t have to invest in expensive infrastructure, or manage ageing legacy systems, it can offer its products and services at a lower price. This is not ‘yet to happen’. It is happening now.

Let’s define an API

Simplistically, these APIs allow information or data to be shared between various parties in a standardised way. An API represents common, business functionality that can be used within a range of contexts. For example you can define whether an API is private to an organisation, or public for anyone to use.

Common characteristics of a good API include being:

  • Easy to discover, easy to understand and easy to use
  • Designed for a range of customers with different use cases
  • Adopted and used by a large number of customers
  • Expected to evolve over time.
Transforming the banking landscape

Through open banking, the ownership of a customer’s financial data will shift back to the customer from the bank. In addition, it will be easier for new entrants to come into the marketplace offering simpler value add propositions, be they product or service, than the big incumbents. In such an environment, proprietary customer data will become less important and the ability to aggregate, manage and analyse data will become increasingly important. We have already seen the establishment of Amazon Lending1.

New competitors could emerge from other technology giants such as Facebook, Apple, Alibaba, Netflix and Google.

Additionally, new product innovators that introduce better priced and more accessible choices for customers are also likely to result in increased pressure on traditional banks to retain the ownership of the customer relationship.

A recent World Economic Forum report, co-authored by Deloitte,2 predicted that traditional banks “are at risk of being deeply disrupted by the drive towards platform model of banking” and that “platforms that offer the ability to engage with different financial institutions from a single channel may become the dominant model for the delivery of financial services”. This transformation is under pinned by APIs.

Considering strategic options for retail banks

If the banking landscape in the near future may look substantially different from today and there is a real risk of being disrupted, where do you see yourself in three or five years?

Deloitte’s research3 on the impact of open banking concludes thatbanks have four broad strategic options, two of which do involve losing control of the customer interface as products and distribution become unbundled. These four options are not mutually exclusive. However, organisations pursuing more than one option are likely to need to sharpen their own proposition for each option they pursue to remain competitive.

Key questions when considering your most suitable approach include:

  • Target Customers: Are you going after a broad set of customers with diverse needs? Or do you want to focus on customers that value choices and the ability to exert control?
  • Business: Are you building an infrastructure on which an ecosystem can develop? Or are you connecting a large number of customers and suppliers?
  • Relationship driver: Are you a reputable trusted brand that can fulfil unique needs? Or are you a central access point to multiple competitive options for financial needs?
  • Value chain expansion: Are you looking for a natural extension of today’s value chain by leveraging various partner ecosystems (both within the financial services industry and with adjacent players such as retailers and utilities)? Or are you largely looking for something similar to today’s value chain?
  • Value chain ownership: Are you addressing core financial products - with services and experience being externalised? Or is the focus on customer reach and services (e.g., advice and recommendation) with financial products being externalised?
  • Degree of openness: Are you looking for a completely open platform? Or would you prefer something only slightly more open compared to today?

Once you’ve answered these questions, you can start shaping your preferred approach.

Daniel Nilsson is a Consulting Partner at Deloitte and has, throughout his career worked with banking and insurance clients across Europe, Asia and Australia. His expertise extends across the enterprise from the strategy of defining business operating models and creating customer journeys, to the design of the technical architecture as well as leading the program delivery.

End notes:

1. In the US Amazon’s CEO Jeff Bezos has stated that he was looking to team up with banks that could help Amazon expand its lending program for small businesses that sell on Amazon’s web- sites. Amazon is also reported to be is contemplating launching a new checking account that would cater to young people and “the unbanked” — those defined as having struggled to gain access to traditional financial services. See also amazon-teams-bank-america-`business-lending/339700002/ and

2. World Economic Forum and Deloitte, Beyond Fintech, 2017. See also au/en/pages/financial-services/articles/beyond-fintech.html

3. Deloitte, Open Banking, How to flourish in an uncertain future, June 2017. See also: https://

This article was first published in Asia-Pacific Banking & Finance.

Published: July 2018

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