Platform thinking: Powering next-generation banking services

As Nik Willetts, Deputy CEO, TM Forum said in his keynote speech at TM Forum Live! Asia in Singapore, “The platform business is where the profit is.” This was echoed in a presentation by Rana Peries, Director of Innovation & Digital, Barclays, who sees huge potential for APIs and platforms to power the next generation of banking services. Industry estimates suggest there will be 1.7 billion digital banking customers in Asia by 2020. Digital banking is not new, although most of the interactions are still transactional and informational – making payments, checking balances and so on. Few banks acquire new customers via digital channels and engagement is low, compared to apps such as social networking, music and sport, for example. Digital tools such as APIs can enable banks and other companies to innovate and engage with customers. Broadly there are three strategies that the banks are using, according to A.T. Kearney: To engage with customers better, companies need to think of something else, other than just a banking service or a banking app – and one of the key opportunities Peries sees for banks, particularly in Asia, is using APIs to drive these new business models. APIs enable banks to bring together various services in a way that is meaningful for the customer. They facilitate important ecosystem partnerships too, such as with fintech startups, who can do things fast and have strong customer insights. Banks can bring the banking assets together on a platform, via APIs, and invite fintech partners to co-create with them.

• Digital as a project – around 32 percent are focused on digital and Internet banking, particularly on improving the mobile channel experience and perhaps trying to upsell new products.
• Digital as a new business model – about 42 percent are looking at new models such as digital wallets, peer-to-peer lending and personal financial management tools.
• Digital is the way we do business – approximately 32 percent are aspirational newcomers who do everything digitally, from customer acquisition to service support. However, there are regulatory challenges here.

Peries said, “If you combine the capabilities and assets of banks with the capabilities that fintechs bring to the table then you have a way of accelerating innovation and solving some of the challenges to driving it.”

The aim is creating digital products that are not primarily about banks by combining banking services and other services via APIs. Examples of this in action include: Building customer engagement requires thinking differently, Peries said.

• Halo Pay: An app for small businesses to manage staff and make salary payments etc. Peries said, “It’s not just about the banking part of it; it’s about giving a small business owner something they can use on a regular basis.”
• My Money Changer: An app to allow travelers to find the best exchange rates
• SmartSlip: Payroll software that gives employees more control of their finances and reduces the time the business spends administering payroll and HR.

He commented, “Innovative thinking around a banking API and payroll API have been used to create digital proposition that the user actually clicks on regularly. It creates a strong engagement and simplifies the process.”

Just like it isn’t realistic to expect customers to come to only banks for Internet and mobile banking, telcos can’t expect customers to come to only them for all service requests either. New API business models are user-driven so “if you are not playing in that space, you risk being left behind,” Peries warned.