Asia’s open strat­egy move­ment; APIS and achiev­ing com­pet­i­tive edge

Sin­ga­pore is favour­ing an or­ganic, mar­ket-driven ap­proach in the adop­tion of open bank­ing APIS.

Singapore Business Review - - EVENT COVERAGE: SBR AWARDS -

As fi­nan­cial in­sti­tu­tions grap­ple with mount­ing reg­u­la­tion, dig­i­tal trans­for­ma­tion and chang­ing cus­tomer de­mand, there is wide­spread re­al­i­sa­tion that age­ing, legacy tech­nol­ogy sim­ply won’t cut it any­more.

An open strat­egy is needed for a com­pet­i­tive edge. Whilst in prac­tice this might look slightly dif­fer­ent for banks, de­vel­op­ers, Fin­techs, reg­u­la­tors and cus­tomers, the en­tire in­dus­try should be look­ing to find ways of un­lock­ing the po­ten­tial which will im­pact and, ul­ti­mately, pro­vide ben­e­fits for all in­volved.

With the ob­jec­tive of stim­u­lat­ing com­pe­ti­tion in bank­ing, mone­tary au­thor­i­ties across Asia are look­ing at this them­selves and start­ing to put in place a num­ber of

Open API di­rec­tives and spec­i­fi­ca­tions de­signed to dra­mat­i­cally re­duce bar­ri­ers to en­try, cre­ate op­por­tu­ni­ties for nim­ble and in­no­va­tive play­ers in the mar­ket, and en­cour­age com­pet­i­tive­ness within Asia’s bank­ing sec­tors.

Although the use of APIS is not new, their abil­ity to max­imise po­ten­tial and en­able users to glean deeper in­sights has seen huge growth. In this evolv­ing en­vi­ron­ment, banks and Fin­techs need to work to­gether; in­cum­bent fi­nan­cial in­sti­tu­tions bring breadth and depth of cus­tomers, trust and proven ex­pe­ri­ence whilst Fin­techs and chal­lenger banks have the ad­van­tage of in­no­va­tive ap­proaches to tech­nol­ogy and per­haps greater en­gage­ment with cus­tomers who en­joy seam­less bank­ing ser­vices.

It’s about col­lab­o­ra­tion - com­ing to­gether to de­velop the dig­i­tal bank­ing ser­vices cus­tomers have come to ex­pect.

A bal­anc­ing act

Hav­ing taken early steps to em­brace the Open Bank­ing revo­lu­tion, Sin­ga­pore is said to be favour­ing an or­ganic, mar­ket-driven ap­proach to en­cour­ag­ing adop­tion of open bank­ing APIS – an ap­proach which seems to be work­ing, with DBS launch­ing the world’s largest API de­vel­oper plat­form in Novem­ber 2017. In Hong Kong, the Hong Kong Mone­tary Author­ity – in­spired by PSD2 in Europe – re­cently launched an Open API frame­work for con­sul­ta­tion with the in­dus­try. Fur­ther­more, a num­ber of in­dus­try bod­ies are also look­ing at the need for stan­dards around API plat­forms within the fi­nan­cial ser­vices in­dus­try. As open strate­gies gain broader adop­tion, fi­nan­cial ser­vices reg­u­la­tors will al­most cer­tainly con­tinue to take a stronger role in shap­ing in­dus­try stan­dards.

Just as Sales­force set the stan­dard for sales au­to­ma­tion soft­ware and cre­ated a com­mon plat­form for sales au­to­ma­tion apps, the same needs to hap­pen in bank­ing. Fi­nas­tra CMO, Mar­tin Häring said, “While Fi­nas­tra strives to en­sure greater agility, re­li­a­bil­ity, se­cu­rity and open­ness within the bank­ing sec­tor, we are also de­ter­mined to help de­liver sig­nif­i­cantly lower op­er­at­ing cost mod­els and more so­phis­ti­cated and cus­tomer-cen­tric ser­vices that are fit for pur­pose in an in­creas­ingly com­pet­i­tive and reg­u­lated sec­tor.

A plat­form-based ap­proach, un­der­pinned by an ex­ten­sive ecosys­tem of par­tic­i­pants that all ad­here to com­mon stan­dards, is cru­cial in en­abling banks to quickly ac­cess, in­te­grate and de­ploy new APIS from Fin­techs and de­vel­op­ers.”

Con­nect­ing the old with the new

The prepara­tory stage is key for fi­nan­cial in­sti­tu­tions look­ing to tran­si­tion to an open strat­egy. The first stage is to look in­ter­nally – se­lect the right model to adopt APIS that best sup­ports the or­gan­i­sa­tion’s over­ar­ch­ing busi­ness model and one that will en­able them to take ad­van­tage of the rich­ness of ex­ist­ing sys­tems.

This is a process Fi­nas­tra went through sev­eral years ago as it made the move to pro­vid­ing an in­no­va­tive and col­lab­o­ra­tive open fi­nan­cial ser­vices plat­form, re­cently open­ing its ar­chi­tec­ture for third par­ties to de­velop and de­ploy ap­pli­ca­tions.

In many cases, a hy­brid in­te­gra­tion of legacy sys­tems and an open strat­egy, fo­cused on con­nect­ing tra­di­tional meth­ods to new in­ter­nal ap­pli­ca­tions and ex­ter­nal third par­ties, will prove most ef­fec­tive for those with a heavy de­pen­dence on legacy ap­pli­ca­tions.

An API strat­egy can ex­tend the value of ex­ist­ing tech­nol­ogy in­vest­ments and cre­ate value by ty­ing to­gether dis­parate sys­tems and grad­u­ally in­creas­ing the in­ter­nal ac­ces­si­bil­ity of data across var­i­ous busi­ness lines. This, in turn, can en­cour­age the de­vel­op­ment of in­no­va­tive ap­pli­ca­tions and ser­vices in col­lab­o­ra­tion with third par­ties such as de­vel­op­ers or Fin­techs. Once a true plat­form ap­proach has been es­tab­lished, banks can drive in­no­va­tion from within in col­lab­o­ra­tion with third par­ties and con­tinue to progress in­cre­men­tally, em­brac­ing trans­for­ma­tion ini­tia­tives and evolv­ing with the agility to meet ever-chang­ing cus­tomer de­mands.

The rise of a col­lab­o­ra­tive, open ecosys­tem where banks, Fin­techs, chal­lengers and other in­dus­try play­ers work to­gether to fur­ther in­no­va­tion is the only way the in­dus­try can con­tinue to de­liver what cus­tomers want.

“Open col­lab­o­ra­tion is the new in­no­va­tion of fi­nan­cial ser­vices. ” - Imad Abou Haidar, Manag­ing Di­rec­tor, Asia Pa­cific at Fi­nas­tra

Imad Abou Haidar, Manag­ing Di­rec­tor, Asia Pa­cific at Fi­nas­tra

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