Whilst mobile, cloud, big data and social (Gartner's nexus of forces) have stolen the limelight in being transformative, a relatively silent storm has been brewing in the world of API's. For business people it doesn't help to have an acronym like API (Application Programming Interface) as it sounds very technology oriented and something that IT should manage. However the good news is that many banks IT have been very active in the API space. Many have participated or led their own "hackathons" – essentially a short fixed time period to use API's to create new software.
Regulations like PSD2 and initiatives like OpenBankProject and a driving banks to publishing API's to their systems and data (of course in a controlled and secure way). And the benefits for banks to drive innovation through a plethora of start-ups and software companies is clear:
- Developers get access to bank data/services to create new applications to sell to the banks customers
- Customers get a wider range of useful applications from a broader range of suppliers than the bank alone
- The Bank creates a broader eco-system based on their data/services that will help differentiate and compete harder against their competitors.
Done well, it really is a Win-Win scenario. And yes there is a but, are the banks making the most of this technology? Whilst a lot of focus is given by Banks on publishing API's, not as much focus is given on foraging and consuming 3rd party API's.
API's are used broadly across all industries and there is huge potential for banks to create real value added services and products or to dramatically optimise processes. Also to drive real transformation in Digital Banking. For example look at CommonWealth Bank's property search app, although the "augmented" reality feature stole the headlines, it was the use of 3rd party API's to provide sale prices, property history and details that is the smart feature. Of course the customer can go to the different sites themselves, but this puts everything in one place, aggregating data from multiple sources to make the buying experience much easier.
Similarly there are opportunities to create better experiences around key decisions that have financial implications like buying car, planning a wedding, going to university, having a baby. Transformational digital banking solutions can create better experiences for all life stage events, and API's are the key to creating a seamless experience where the customer perceives all the data and service is being managed by you.
Hence in the same way that Banks need to think beyond banking data (link to previous blog), Banks also need to think beyond banking products and services. Again the opportunities can seem so vast that this can be an overwhelming task, but a focused approach could be to specialise content and services for a more targeted customer segment (link to 1st blog in this series). So for example using API's could Student banking also provide:
- Purchase travel tickets
- Notification of festival ticket availability
- Price checker/locator (buy anything at lowest price locally)
Almost 15000 sites/apps have listed their API's on http://www.programmableweb.com/apis/directory so there's already a huge amount banks can do to drive innovation in Digital Banking for all customer segments today. The bank customer of the future however might want something more though.
Whilst there is a lot of focus on Millennials, this generation weren't mandated to learn coding, not like the generation after them who have yet to leave school! This is a generation that will have done their hour of code, many will have written their first apps before reaching puberty. We have yet to learn what this generation will be fully capable of, especially as they utilise even simpler scripting capabilities using sites like ifttt.com or zapier.com. It's likely this generation will be scripting their own interactions, mashing up banking operations with other sites themselves.
What's clear is that API's are as strong an enabler for Banks as Cloud, Mobile, Social and Big Data, and that Banks have to take advantage not only by publishing their own API's to create an ecosystem of partners, but also to consume 3rd party API's much more voraciously than they have done so to date.