Open Banking has been one of the major derivatives of API Economy or APIfication- complete evolution of new business model around Banking services delivered through APIs.
Bank Open is one of the success stories around Open Banking in India where it builds a platform to provides accounting services along with Banking for SME customers. SME customers not only able to manage their receivables and payables but also manage payments, collections as well as complete reconciliation. The power of the platform will come through when one starts addressing other banking needs of customers.
Open Banking can also be termed as Platform-based business where Banking as a platform been built to make services available through APIs for anyone to develop new business models. Another commonly used term is Banking-As-a-Service.
Leading example in this segment could be BBVA which launched one of the first Banking-As-a-Service platforms while closer at home, we have seen leading banks like RBL Bank, YES Bank driving big on Open Banking through partnering with Fintechs to deliver new products/service models. The new entrant to segment Federal Bank harping big on its advantages. In fact, most Banks in India start warming up, there is a long way to go before it starts adding to the top line to revenue.
It derives its power from APIs which helps Banks to
- Allow access to data/applications
- Enable partners to write applications that use other applications as part of their core functionality
- Acts as a universal plug to standardize access
- Give controlled access to assets with controls such as encryption, permissions, user management
Though, it’s not only making APIs available for the market that will help one to build a successful business model around Platform enabled Banking. This would need a strategic approach with a long-term view with a clearly drawn Open Banking Strategy and its execution.