API Business Models

Australian Banks: Will They Pick Up the API Agenda in 2016?

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In September last year, in partnership with OpenBankProject, we conducted an industry survey with 22 banking executives around the world to ask about their API preparedness and implementation strategies.

The findings have been published in our APIdays Banking APIs: State of the Market Report, sponsored by CA Technologies and Axway.

One of the big findings in our study was that banks are adopting an API strategy because they are needing to be more customer-centric. For banks, we found that this was the key driver for implementing an API Strategy. It is true that regulatory pressures in the UK and across Europe are requiring banks to think about creating payment APIs. But it is the need to meet customers wherethe customers want to be — on their mobiles, via web apps, and with an emerging wearables market — and when in the daily lives of customers they want to connect. This is making an API strategy a priority for the most competitive and forward thinking banks around the world.

At the time of our research, despite contacting several bank executives from across Australia, we received just one response. At the time, we looked at the public API programs of various Australian banks. While most banks that we reviewed had a payments API, there were signs that banks might be doing the minimum necessary. For example, Westpac’s PayWay API pages included a PDF document to explain their API and requires an enquiry registration in which “a banker will call you back in 1 business day to discuss your business requirements.” It is a bit different to global best practices in developer engagement, which encourage a self-serve registration process and opportunity to explore an API sandbox and documentation independently.

But for a traditional sector like banking, six months can be a long time, and while last year during our banking research it may looked like API strategies were stalling across banks, 2016 is already showing signs of increased action. In the closing months of 2015, National Australia Bank (NAB) hosted a hackathon in partnership with Axway, where fintech startups were encouraged to create new products based off the NAB’s (sample) APIs. At the start of the month, the ANZ Bank announced a search for a Digital Banking Lead while talking about new partnership opportunities at a Melbourne-based fintech meetup.

Banking API thought leader Rana Peries, now at Barclays but who has previously worked with at Commonwealth Banks and National Australia Bank, says the Australian banking scene could return to emphasize API strategies in 2016. “I think one of the key challenges for the banks will be to establish a comprehensive API strategy that articulates how they are going to create value from APIs. In the absence of this, I believe the API initiatives will be ‘1st generation’ and ‘technology lead’ initiatives” he says.

Rana doesn’t see any signs that banks are ready to create new business models that aim to monetize APIs (this is not a priority globally either, which for now is more focused on measuring customer engagement with API-enabled products and services). However, he does believe there is a great opportunity for Banks and financial services institutions as a whole to leverage APIs to enhance both customer experience and product distribution.

He also believes the bulk of the work to standardize APIs for common services — in areas like customer accounts and transaction history (the two next-in-line priorities for API development in our global banking API study) — will be led by third parties like TipsGO and OpenBankProject, who have developed API banking platforms.

“I know that WSO2, TipsGO, and MuleSoft are all in discussions with Australian banks, but there have been no announcements from the banks on any initiatives,” Rana says.

“At past APIdays events in Australia, banks were fairly quiet in terms of speaking, but this year we are now seeing a strong desire from them to present and share their activities around API strategy. Banks are now recognizing APIs as a way to collaborate — and at times compete — with fintech startups,” says APIdays Australia organizer, Saul Caganoff from Sixtree. “With signs that Australian banks might be publicizing the API work they kept under wraps throughout 2015, APIdays is the perfect source for inspiration and opportunity to re-engage with an essential component of the digital transformation agenda.”

Rana will speak at APIdays Australia in Melbourne on March 1 & 2. James Bligh from NAB, Uli Holtel from Bankwest, Tim Liddelow from ANZ, and Graham Lea from Tyro Payments will also be speaking. The APIdays team will also be presenting new research following up on our Banking APIs study.

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