Open Banking stands to transform banks’ relationship with customers, in terms of how they interact with them, the services they provide, as well as the channels through which they do so. Open Banking allows API-enabled third-party companies to access bank’s data in order to build a whole range of new experiences for consumers. This is the future of financial services.
This shift in financial services has been spurred by the advent of Open Banking legislation in Europe and the UK. In January 2018, the Payment Services Directive 2, known as PSD2 came into effect in the EU. Conversations have already started about implementing the directive here in North America. This directive requires banks to allow trusted third parties, with the customer’s permission, to access account information and initiate payments from those accounts. Application Programming Interfaces (APIs) are the mechanism for achieving this, allowing third-parties to access bank’s data infrastructures in an effective, secure and open way. The UK’s Open Banking Standard, leading the way in regulation and being adopted by many EU banks, says that “Open Banking is designed to bring more innovation to financial services.”
API-based Open Banking will be the new channel through which banks engage with the digital world. Customers will be able to interact with their financial services everywhere, rather than solely through the bank’s proprietary channels.
Many banks globally are seizing this opportunity, exploring valuable collaborations with like-minded organizations, from the FinTech ecosystem to large banks, that can help them quickly harness the immense value of their data.
Blanc Labs helps clients define their Open API strategies, deliver modern real-time flexible services, and speed up the ability to work with others in the innovation chain.
API-led connectively will enable banks to introduce a mix of homegrown and FinTech applications, services and experiences in a plug-and-play manner. For example, a “manage-your-money assistant” that helps you securely track incoming and outgoing cash flow, create budgets and track investments across every bank account and credit card you own. Banks can extend and enhance their native services by adopting and deploying Open APIs.
Offering compelling value-add services and products, developed by third parties and powered by banks, will allow banks to fulfill their commitment to Customer Centricity. Existing customers will be better engaged, ensuring they remain loyal fans. Value-add services will also appeal to new customers, who may be looking for alternatives because their bank doesn’t embrace the latest innovative technologies.
Banks can seek new revenue streams from opportunities enabled by Open APIs. Opportunities such as the ability to expand quickly into new channels, markets, and banking services for customers. In addition, banks can release Open APIs as products and profit from referral or usage fees. Those that want to better compete in this ecosystem need to approach Open APIs and their data as critical pieces in their business-model success.
By embracing API-led connectivity, banks can begin to view themselves as technology platforms that offer Banking-as-a-Service. Banks can look to Apple and Amazon, two companies with loyal customers because they’ve created compelling customer experiences through platforms that offer best-in-class products. The organization owning the ecosystem, powered by a flexible technology platform, will be able to enhance the value of the entire system, thus controlling the economics.
Blanc Labs’ services approach allows financial institutions to make core banking system and processes ‘headless’ by unlocking customer data and building client-centered digital and interactive experiences. Minimize traditional integration challenges with flexible APIs that drive efficiencies and produce real value.
With a deep understanding of Open API Banking and the risks and benefits it presents, Blanc Labs can help you chart a path forward. We help define your API product roadmap, with a focus on unlocking siloed data and the best monetization strategies.
We specialize in API architectural and technical design for Open Banking. We work closely with business owners to identify and prioritize an API development roadmap and recommend changes in the architecture and design of back-end services for streamlining API exposure.
Our full-stack technology team has expertise in building custom solutions that are configurable and flexible. We build rapidly while adapting to changing client needs. Use our Proof of Concept accelerator to prototype your Open Banking services to see them in action before deploying them live.
An active member in the FS-ISAC and Financial Data Exchange (FDX) industry consortiums, Blanc Labs works with financial institutions and FinTechs on the end-to-end certification and enablement of FDX APIs.