As PSD2 looms into view, open banking and APIs have been central to discussions at this year’s Sibos, with banks grappling with the threats and opportunities presented by the opening up of data.
Introducing one panel on the subject, Qatar National Bank’s Leda Glyptis noted that just two years ago an API session had failed to draw an audience in a the small Innotribe stream. Now she was looking out to a packed room in the main conference.
This reflects the fact that banks are taking open APIs far more seriously - and not just because many are being forced to by the changing regulatory scene. An audience poll found that 43% have an API strategy, 42% are thinking about the need for one, and just 16% have no plan.
BNY Mellon’s Saket Sharma told the assembled bankers that they should not think in terms of discrete API strategies, but see the issue as an integral part of their overall digital plan - something all FS firms accept they must have.
This is because APIs are simply delivery methods - what matters is the bank’s intellectual property, its data and algorithms.
Asked about the biggest challenge related to open APIs, more than half of the audience picked value generation. This prompted David Andrzejek, from Apigee, recently acquired by Google, to remind them that banks have been overtaken in the rich lists by Silicon Valley platforms which generate revenue in very different ways.
NatWest’s Damian Richardson picked up the theme, conceding that PSD2 would probably hit payments revenues but insisting that this just means new strategies, taking advantage of open APIs, would need to be found.
Richardson had a busy day, also appearing on a panel dedicated to the UK’s Open Banking initiative, set to arrive in January. While cautioning that Open Banking will likely get off to a slow start, the speakers spoke enthusiastically about its potential.
Vocalink’s George Evers says that the initial concern among banks that fintech challengers will swarm down like locusts, stripping all of the data, has passed. The two sides have become “friends with benefits”, recognising they have different strengths.
In fact, Richardson suggested, by getting fintechs involved, the banks have a far better chance of finding the services that really cut through with customers and bring the wave of innovation that will help banks find new revenue streams.
One firm hoping to help facilitate the new API-based era of fintech-bank cooperation is the Open Bank Project. Its boss, Simon Redfern bounced around the Fintech Theatre stage to extol the value of APIs; they can even - as he demonstrated - be used to produce some atmospheric music on the synthesizer.