The application programming interface (API) economy has exploded over the past decade, with platform companies such as Google, Salesforce, eBay and Facebook deriving much of their market power from the APIs they offer to their partner ecosystems. As Open Banking regulations pull banks into this API economy and the broader financial services ecosystem, they have an opportunity to find ways to drive revenues from APIs.
Following the rush to meet the prescriptions of the Revised Payment Services Directive (PSD2), leading banks in the UK and Europe are looking beyond regulatory compliance towards monetization of Open Banking services and interfaces. Those operating in markets where Open Banking is less mature are finding inspiration from Europe about how they can implement Open Banking regulations with monetization in mind from the outset.
This could position them to adopt future-proof technologies and business models that are primed for long-term competitive advantage. The banks that have a vision for Open Banking beyond compliance will be best placed to compete effectively with non-traditional players such as big techs and fintechs, and to deliver the seamless experiences their customers expect.
To keep pace with digital innovators, the leading incumbent banks are seeking to organize their businesses differently and build new business and technology capabilities. They are re-evaluating their operating models and investing in open technology architecture. These banks are also starting to rethink data management needs and find new ways of working with ecosystem partners.