July 5, 2016

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Open API Approach to Fuel Innovation

Google/Apple (digital wallet and mobile CX platform), traditional industries like telecom (m-Pesa), cryptocurrency (BitCoin, Ripple etc), and digital society (P2P, Crowdsourced lending etc) pose a threat to the FS industry—and are disrupting it. To stay ahead of the competition, organizations are trying to redefine their existing business model, create and sell differentiated product and services, engage customer and community, and innovate and optimize processes.

This requires rethinking of the way the banks run their IT and operations. An open banking approach is required to fuel innovation, increase agility, reduce business risk, and improve customer satisfaction. Fidor, which opened its digital doors to UK consumers in September 2015, is a great example of one such innovative challenger bank. Although its social-media-led approach to building an online community has gained most attention, its open platform strategy is more significant. Fidor’s strategy is based on two distinguishing concepts, both centered on openness:

  • Community banking - Members can share advice on forums and collaborate on product development
  • ‘App store’ banking - The bank operates an open platform that hosts independent services from third parties

Why is open API so important?

  • Unlock data silos and optimize value chain - APIs make the bank more agile. By unlocking data silos between internal systems and partners, business processes are optimized across the entire value chain
  • Open up data and access new markets - By intelligently using APIs, banks can access new markets more easily. Data is the lifeline of the digital business world, and APIs allow you to drive innovation and monetize the information with new products and services
  • Open APIs driving innovation - Banks can leverage the ever-growing community of free-agent app developers to stimulate the development of innovative apps that add value to its core business. This does not require investing directly in development efforts but simultaneously increases the production of new ideas and decreases development costs
  • Accelerate web/mobile app development - APIs provide developers with service interfaces to accelerate app development across mobile apps, cloud platforms, and partner applications
  • Offer a consistent experience across channels - APIs provide the ability to connect systems and share data, to deliver a seamless omni-channel customer experience
  • Expand and innovate service delivery through the Internet of Things (IOT) - APIs provide connectivity beyond mobile to the Internet of Things and improve engagement by putting customers first

“APIs provide the key to unlock new growth opportunities at an unprecedented scale in our digitally connected economy. The capability to manage APIs will soon become a primary driver of competitive advantage.” - Mohan Subramaniam, Associate Professor of Strategy at Boston College’s Carroll School of Management

API management is critical to digital success

With access comes responsibility, and banks must protect information gained about the customer as well as create value. Application programming interface (API) management tools such as Mulesoft and Apigee can help banks expose legacy systems.Applications as APIs, provide developers with APIs to build innovative apps, and guard against the inherent risk of exploring APIs to public domain.

The right API management solution can empower banks to transform their business and keep them secured:

Integrate everything

  • Expose legacy systems and applications as APIs, allowing them to be consumed in new ways
  • Develop a flexible, future-proof platform to integrate with new technologies and standards

Enable developers

  • Provide developers with APIs to build apps that deliver a great customer experience
  • Manage access to sensitive enterprise data

Secure the open enterprise

  • Guard against the inherent risk of exposing APIs.
  • Compliance with the standards for your digital projects

Monetize your APIs

  • Plan business models in a flexible way and generate revenue for the use of APIs
  • Integrate with billing systems to facilitate a single view into APIs and billing

Competitive differentiation in the industry can be gained by providing contextual and personalized experiences to customers. Banks need to embrace open APIs to drive innovation and succeed in their digital journey.