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 banking 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 of BBVA which launched one of the first Banking-As-a-Service platform 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 advantages of Open Banking. In fact, most of Banks in India start warming up for Open Banking, there is a long way to go before it starts adding to the top line to revenue.
Open Banking 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 Open Banking or Platform enabled Banking. This would need a strategic approach with a long term view with clearly drawn Open Banking Strategy and its execution.