Read
May 24, 2018

Banks as Platforms: Platforming for Banks and Fintechs - part 2

Nicholas Gimenes
Growth & Product Marketing Leader

In the previous post, we talked about the new pressures in the industry (regulations, technologies, fintechs, customer expectations...) and how banks and fintechs can take advantage of this scenario, as well as the advantages of implementing an API strategy. In this post, we will continue with the main platforming strategies for banks and fintechs.

See part 1 here: Banks as Platforms: APIs in Banks and Fintechs strategy - part 1

Platforming Strategies for Banks and Fintechs

The current competitive environment in the financial sector requires a new mindset. Competition is no longer just between companies, with their own products and assets, but between ecosystems, with partners who are able to combine services, orchestrate resources and perform coordinated actions.

The platform strategy seeks to build or integrate an ecosystem with customers, partners, services and devices in order to promote the creation and exchange of services so that everyone can capture value.

This integration between the ecosystem provides its members with advantages such as:

  • Reaching new sales channels
  • Providing interactions with new customers
  • Creating and implementing new products/services
  • Expanding capabilities for existing products and services

[caption id="" align="aligncenter" width="567"]

Bancos como Plataformas - Marketplace

image: https://br.clear.sale/blog/post/o-que-e-a-economia-da-api[/caption]

Platform Thinking Principles

Changing the focus of strategies:

  1. From owning resources to orchestrating resources.
  2. From internal optimization to external interaction.
  3. From customer value to ecosystem value as a whole.

Gartner identifies 4 core platform-based strategies that are non-mutually exclusive and differs on openness levels (internal, restricted/private, public APIs):

  • Collaboration Platforms - they enable integrated and collaborative operation with ecosystem partners in new ways.
  • Orchestration Platforms allow the orchestration of shared resources and processes between ecosystem partners.
  • Matching Platforms - they facilitate the meeting of claimants and bidders.
  • Creation Platforms - enable partners to build their own apps, products/services, capabilities and business models on top of the platform.
Estratégias de Plataformização

Examples of Banks with the different platforming models:

Some banking platform initiatives:

Fidor Bank - Created a monetized payment APIs, accounts and communities (fidorOS) API layer that enables partners to create their own apps and services for customers and integrate with the bank's solutions.

ING Bank - Internal APIs platform for global reuse and enable co-creation.

Crédit Agricole - Provides third-party apps built on top of their APIs to help customers control their finances.

Kaspi Bank - Implemented a marketplace with products from retail customers and offers payment and credit options during the purchase.

HSBC - Correspondence between customers who need services and those who offer these services, supporting transactions.

BNY Mellon - Nexen platform that integrates customers, partners and fintechs, providing apps, APIs and big data solutions.

Capital One - APIs to enable merchants to make customized offerings to their customers, which can be paid with loyalty program points.

Commerzbank - They own Mainfunders, a P2P lending platform in which it matches companies that need credit and investors, providing a transparent process between them.

BBVA - Built a creative platform with more than 1500 registered partners accessing its APIs that offer big data services and solutions.

Barclays - Allows financial technology providers to create new capabilities from their private digital platform.

DBS - Launched a car marketplace, integrating different dealer platforms, supporting the transaction and offering financing and insurance.

[caption id="" align="aligncenter" width="603"]

APIs Banking

image: https://jonscheele.com/apis-are-essential-for-digital-financial-services/[/caption]

However, in order to support a platforming strategy (whether it be building or participating in an ecosystem), banks and fintechs need a mechanism for the agile and efficient integration of internal systems with other partners.

APIs are a standardized and agnostic way to make these integrations between people, things, applications and ecosystems - safely and scalable.

 

Bank as a Platform - BaaP

The implementation of the APIs can be of 3 ways and apply different monetization models:

Closed or Internal APIs - used for integrations between systems within the organization. They provide improvements in internal operations, cost savings and greater flexibility. They favor the adoption of a Mesh Apps architecture based on microservices.

Restricted or Private APIs - used for integrations between the organization systems with specific partners. They make it possible to expand the offer and add value to the services, combining the functionalities of the organization's and partners' systems.

Open or Public APIs - used to make data and functionality publicly available. Open APIs allow developers to create their own ideas from them and perform self-service integrations, opening up possibilities for innovation and business. In addition, APIs can provide data or services and be marketed directly as products (API-as-a-Product).

[caption id="" align="aligncenter" width="582"]

APIs strategies for Banks

image: https://www.tearsheet.co/4-charts/4-charts-on-the-state-of-banking-apis[/caption]

API monetization models

API Monetization Models

For managing APIs, the use of a complete API Management platform provides essential functionality such as Mocks, Smart design, and exposure control (Lifecycle, Versioning, Advanced Analytics) for faster delivery by developers.In the presentation of the APIs through the API gateway module, modern standards of security (Oauth, cryptography, injection protection, among others), performance optimization (Caching, Quota Control, etc.) and data transformations are applied.

In addition to features for design, exposure, and governance, engagement tools are also critical to encourage the effective use of APIs by users and to gather feedback for continuous improvement.

Hence, the main tool is the portal Dev module, where documentation of APIs, code samples, download files and SDKs, sandbox environment for tests, and a forum for help and exchange of information are made available in an accessible and objective manner.

How can Sensedia help your business?

Sensedia has one of the leading API Management solution, as well as a Consulting and Guidance team to assist you with your digital business strategies, IT architecture, Microservices and API design.

Sensedia's API Platform offers several tools for managing the operation and complexity of the APIs: API Gateway, Security, Dev Portal, Analytics, Lifecycle.These modules facilitate the design, exposure, consumption, management and monetization of APIs for creating Apps, communication of internal systems, development of microservice architecture, ecosystem integration, IoT projects, open innovation initiatives, and hackathons.

In addition, Sensedia organizes the largest event in the Americas focused solely on APIs, the API Experience.

Thanks for reading!