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LATEST THINKING


OVERVIEW

The interconnected business

Open banking—a platform-based business approach—could revolutionize how banks generate value. With increasing pressures from regulations and competitors, open banking offers leading banks the opportunity to expose data, algorithms and processes through application programming interfaces (APIs) and create new revenue streams, like today’s successful digital giants.

Banks are at risk if they fail to address open banking. They could miss out on platform-based business models and the strategies they enable. And they could fail to meet consumer demands for seamless digital experiences.

Open banking could make all the difference to banks’ digital transformation programs.

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What is an API?

A proven technology that can help provide access to open data (like banks’ products) and secure shared access to private data (like an individual’s bank statement transactions).

KEY FINDINGS


Become an open bank

Being an open bank means operating like a platform company, with a business model that connects people and processes with assets and a technology infrastructure to manage internal and external users’ interactions.

Banks need to collaborate holistically from the outset and split the bank into two different organizations. Four digital business models can help banks implement the industry vision of open banking:

Utility provider
Banks seeking minimum compliance with PSD2 risk a loss in volumes and the quality of customer interactions.

Digital relationship manager
Banks can tap into external innovation through data and logic exposed through third-party APIs to digitize the customer experience, enhance loyalty and increase share of wallet.

Digital category killer
Internal APIs enable banks to increase business agility, reducing time-to-market by delivering new capabilities faster.

Open platform player
Banks consume APIs from multiple organizations to create a service that can then be resold by others.

RECOMMENDATIONS


Customer differentiation

Banks must identify the business goals that will drive API creation, consumption or both as they seek to offer differentiated services to their customers. To do so, banks need to:

  • Design engaging API experiences that appeal to developers through user-friendly developer sites, enhanced self-service capabilities, and good API documentation and testing

  • Develop new operating models to take into account organizational structures that blend together product development and IT operations.

  • Adopt a new mind-set and culture with strong C-suite support backed by a sound mix of different layers of knowledge and expertise.

  • Create new business processes to manage partner ecosystems effectively.


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