Open banking and APIs have been around for quite some time now. Open banking, as a concept, has helped change and bring about some revolutionary aspects in de-regularizing some things or removing the entry barriers for new people to participate.
But with open banking, and especially what COVID taught us in the last two years, things can be completely virtual. It means there are new ways to use banking services through multiple established channels. You could look at new ways of providing flexibility to your customers to choose the data they want to see and act on. This changed the whole ecosystem by bringing together various providers to make this happen. Open banking was built on an API-first mindset. What we thought was a technical aspect became a business driver; regulations were enforced, and frameworks were created.
Some open banking use cases are –
- Digital identity services
- KYC process automation
- Transaction monitoring
- Financial management services
- Onboarding process automation
- Multi-banking services
- Retail and business payment initiation services
- Risk scoring algorithms
- Transaction reconciliation services
- Product comparison services
- Income verification services
- Credit scoring algorithms
By no means is this an exhaustive list of open banking use cases.
While it started as a framework, any part of the banking system can now be made available as a service. This fast-tracked people’s ability to use open banking as the core backbone for building their business on top. It is very clear that every large enterprise is thinking about open banking and is doing this in some form or shape.
Open banking’s positive impact on a customer’s financial health
- Keep me on track
- Make banking more convenient
- Reward me spending
- Keep my money safe
- Save me money
- Save me time
- Give me inspiration
Consumer’s biggest concerns about the open banking concept
- Identity theft
- Use of data for other purposes other than what I gave consent to
- Sharing data with other parties without consent
- Have my financial information shared with others
- Targetted with unwanted offers
- Not knowing who to talk to if something negative were to occur
- Loss of funds
- Making decisions based on inaccurate data
- Payment error
Customers may have a lot of anxiety. So when we go about addressing some of the key areas, there has to be a clear, well-thought-through strategy.
Essentials of a successful open banking program
Establish and improve on 8 API disciplines
- Strategy-Define what drives your API program. Ensure that you have a proper strategy in mind. When I say strategy, it’s not a strategy on paper. It’s more about the key benefits and driving forces behind the strategy for the organization.
- Discovery and Adoption – Offer a straightforward method for finding and onboarding with your API program. Will they have the ability to play around and subscribe for stuff? Does it require human intervention? Or is it self-service by nature?
- Governance– Create clearly defined processes to create APIs that users can consume safely.
- Does it come out in such a way that you are providing guardrails and safety nets to ensure that things don’t go wrong in the approach that you’re allowing people to innovate?
- Architecture – Combine micro-services and cloud-native principles for a firm foundation. Are you leveraging some of the latest and greatest technology trends and practices, whether microservices or cloud-native principles? So the architecture and technology decisions you make should not slow you down.
- Design– Apply common API design principles to maintain consistency and expedite adoption.
- Support– Help teams succeed as they learn how to use the platform.
- Delivery and Automation– Predictably release new APIs by automating the delivery process. Driving through automation gives you a phenomenal benefit. But the extent to which you can automate differentiates between success and failure. You can do multiple releases daily, experiment with various business and charging models, and see what works and does not. Some of these aspects are fairly hard to get right from day one. But automation will provide you with flexibility.
- Evangelism-Promote the adoption of internal, partner, and public APIs
- Production of the services and APIs is good, but the entire API program will collapse with zero consumption.
Manage APIs like products
Keeping in mind that you’re managing all of these APIs as products is very important. It is very important to take your core domain-specific services and APIs, create them as API products, and manage them as a lifecycle. A unified API lifecycle platform helps to have a successful API distribution strategy, compliance, partnership, innovation, forging, and adoption. Last but not the least, the most important part is adding value to give a differentiated customer experience. Everything boils down to that. If you’re selling services with no clear line of sight in terms of ensuring that you can deliver this, it becomes a big bottleneck.
A few key aspects to keep in mind are –
There is no joy in having too many tools and technologies you can work with just because they are the best integrators. Somebody has to support, run and manage them. So ensure that when choosing the technologies for running your API lifecycle, they are unified and work with one another.
Apiwiz platform – Low code API DevOps platform engineered for better productivity.
Democratize and Upskilling Organization – Abstracts complexity so developers and businesses can do what they do best while reducing costs, complexity, and delays.
Centralizing Best Practices and Governance – Interweave best practices and governance with self-service to deliver better customer experience through consistent process streamlining and cross-functional teams.
Decoupled Control Plane – Decoupled control plane that is not dependent on a Gateway or Service Mesh provider, improving reliability, reusability, and automation.
To conclude, you need to ensure that, keeping some of these building blocks in mind, you are building something allowing people to innovate along with a decoupled control plane so that the underlying technology does not change your open banking strategy. Technology should not slow you down.