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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
Customers can now mix and match products from the entire financial services
By underpinning its marketplace with a set of APIs, Marketplace Bank also seamlessly integrates with a number of leading
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
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
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
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
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?
Degreeof 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
1. In the US Amazon’s
2. World Economic Forum and Deloitte, Beyond Fintech, 2017. See also https://www2.deloitte.com/ 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:// www2.deloitte.com/uk/en/pages/financial-services/articles/future-banking-open-bankingpsd2-flour-ish-in-uncertainty.html
This article was first published in Asia-Pacific Banking & Finance.
Published: July 2018