IBS Journal May 2018
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products from the bank, satisfaction would drop.
“The customer would be able to see the cracks between how those products were offered. It became the role of the end user to try to gather together all those offerings and form their own overall view.”
The digital revolution has meant that people are used to getting a much better retail experience, driven by technology from firms like Amazon. With an audience becoming digital native, as well as an upcoming customer base in the form of Generation Z, banks can’t afford to be digital stragglers. The moment that interaction with the bank is identified as the root cause of a favoured financial app’s slowdown, it won’t be the app that gets the boot.
Just like a fizzy drink: They’re all sugary water but everyone has their favourite brand
“If you think about how banks have previously used information, it’s been through a variety of tightly-controlled channels,” says Healy. Branches, call centres, mobile applications and internet sites were all the staple. “The banks owned them and controlled what kind of services were provided through them. When opening data up to third parties, banks no longer tightly control the interaction. More forward-looking banks should see this as an opportunity, as they can find many more ways to embed their products and services across more third-party distribution channels.” Banks should think about the opportunities of placing their products, like mortgage offerings, on a property website. “In that scenario, consumers win in not having to worry about creating a second conversation around how their bank can help them out.”
The invisible man
Much talk was made at the tail-end of 2017 about the risk of banks becoming a background feature of consumer’s lives, that they might end up the same as a utility company: ever-present but never thought about.
“Next year you won’t have to be a bank to deliver financial services,” Louise Beaumont, co-chair of the Open Bank Working Group and strategic advisor at
Publicis.Sapient, told us earlier in the year. She also believed that banks are so unprepared for the change that something like PSD2 brings, they’ll be happy to open up their APIs and let the fintechs have at it. “It’s a way of siphoning information out without disruption. One of the core lines of the sales pitch of API providers is that they can just smooth their offerings over the top.” At the end of the day, she adds, “it might make you compliant, but it doesn’t make you good”.
Healy says that banks will still be an essential part of consumers’ daily lives. “If a bank builds the right APIs and makes it quite straightforward for an organisation to integrate it into their own offerings, then that’s actually an opportunity.” PSD2 is regulation that tells banks to open themselves up, but it’s still too “early days” to tell what might happen. “PSD2 is similar to telling the banks ‘you must provide plug sockets for others to use’, but whether it’s square pin or round pin isn’t specified. Banks can really optimise the experience they wish to provide to make it straightforward for third parties to use them.” There are product managers embedded in banks now manging their APIs as if they were the products themselves.
“If you think of fizzy drinks, they’re all just bottles of sugary water,” says Healy. “But of course, everyone has a favourite brand because of the way the taste is developed and marketed.” The same goes for banks, which are working on ways to commoditise their API systems to best suit the customer and attract agile third-party partnerships.
“APIs are technical products, so the demographic they need to aim for are technologically minded, and don’t want to be told what to do. Once a developer has found the right API, it should be easy for them to understand them and test everything out.”
Once they make the decision, he adds, it’s important that the third party can then consume the resulting connection in a profitable way. Having an application network in place means that the building blocks are already there, ready to be utilised, argues Healy. At the end of the day, API product managers need to be as much a part of the bank’s core structure as the people responsible for the retail, wealth or investment divisions.
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Ben Kolde/Unsplash
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