There are really two things that explain the fintech revolution – one is seeing clearly how the user journey can be improved and the other is understanding how to adapt technology to bring about the change.
The technology begins with the Application Programming Interface, or API, which is rapidly becoming recognised as a crucial component of the modern wealth and banking experience. The API is also central to the fintech revolution, and will enable the evolution of future business models.
API’s have been around for a long time and in its simplest form API’s define how to communicate and share information between software.
The current wave of fintech disruptors deeply understand how to derive value from API’s. These firms are laser focused on orchestrating a series of technologies and services to meet the needs of their customers.
Looking closely at the fintech disruptors in the market place today, it’s not so much a case of developing new technology, but rather they are adept at identifying a user journey that reflects their customer base and assembling technologies and service providers using APIs to glue the experience together. These APIs are accelerating not only the development of these offerings, but enabling the offerings to respond to their customers dynamically.
One of the strengths of these organisations is their ability to understand the value of APIs and have developed a business model that drives value from interconnectedness.
They are not alone in this pursuit. Forbes accurately noted 2017 was quickly becoming the year of the API economy.
Government is fast on the trail of the API future – in the UK The Competition and Markets Authority (CMA) retail banking market investigation concluded banks are not competing hard enough for customer’s business and new entrants are challenged to enter the space and grow. This in turn means consumers are not benefiting from the new services and opportunities technology can bring.
In response the CMA is implementing a package of reforms, one of which is the Open Banking initiative. Open Banking enables customers and providers to share data securely using APIs.
In Australia, the government has commissioned an independent review to recommend the best approach to an Open Banking Regime.
The Government will seek advice on implementing an open banking system and examine how such a framework can help boost competition and innovation in financial services. It is clear this initiative has the potential to transform the way in which Australians interact with the financial service providers.
If you are looking into systems to participate in the API economy, it’s important to look for modern architected solutions that are Service-oriented with a rich library of APIs for digital integration. You should be seeking solutions that deliver high performance, integrity, security and availability that support straight through processing.
Initiatives like this and the New Payments Platform will support new fintech services, and underpin the rise of the API economy.
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