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Open banking – an open shop but empty shelves

Open banking – an open shop but empty shelves

Banks that are struggling to harness the potentials of open banking can be compared to opening a shop and neglecting to fill it with any products that people want to buy, according to ABN Amro’s lead product owner.

Following his virtual session, ‘Open Banking, Road to Successful Models’ during the APIDays conference, Koen Adolfs tells Finextra Research of his experience building an API platform and developer portal at the Dutch bank, and how this relates to incumbent banks’ innovation strategies. Adolfs claims the bank approached this change differently to some competitors.

He cites as an example the success and growth of ABN Amro’s payments request application, Tikkie. As a mobile app this was already a successful product, but creating an API for companies to plug in to took it to another level. While the basic functionality of Tikkie was already popular, empowering external developers to create products and services is what made it more competitive.

Experiences such as Tikkie have inspired other teams in the bank to offer their own API products fitting both the strategy of the bank and its customer’s needs. This resulted in the development of the Business Account Insights, Business Account Payment, Business Account Notifications and FX Trade APIs and more to come. Combining that with blogs and big events, inspired many developers and companies to create an account and start developing new user experiences, integrations and process automations.

Adolfs compares having a developer portal to running a shop. The bricks and mortar of the physical establishment are not what bring in a profit - it is the products and the customer service that the shopkeeper offers that make it a competitive business model. Being aware that building this combination takes time, this is where certain other institutions may still be struggling to fully harness the potential of Open Banking.

“If you look at some of the more productive banks, they invested in an API gateway or a developer portal, within their innovation departments. As a result, they were developing good products and are definitely front runners. However, the business lines of the company were not involved, which hampers the organizational culture shift needed to be successful in digital ecosystems."

This then makes it more difficult for business development managers to incorporate the products into the broader strategy, which means they run the risk that the innovation team’s products are effectively dead in their cradle.

Adolfs believes ABN Amro was more successful through the business development area of the bank being more closely integrated with the business lines, IT departments and digital developers.

“We saw what was needed as part of our business strategy and were able to help them innovate by providing them with the capabilities and motivating them to think in a certain way,” he says.

“In the short run, that could mean that it takes a bit longer to develop a large portfolio of API products, but the upside is greater in the long run as you can future proof your business with the structural and behavioural change that it nurtures.”

Open Banking will be discussed in depth at EBAday 2020. For delegate passes, register now and join leaders from across Europe's payments ecosystem as EBAday addresses 'The Turning Point in Payments Transformation'.

Comments: (2)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 12 November, 2020, 09:51Be the first to give this comment the thumbs up 0 likes

Nice analogy. Totally resonates with my long-held view that EU-style Open Banking is based on a questionable premise that bank customers want to unlock the value in their banking data. Innovative Fintechs Don’t Need No PSD2 Regulation

In sharp contrast, US-style Open Banking is based on the premise that bank customers want functionality that happens to need their banking data. Even without any regulatory mandate, it has been flourishing for over 10 years since MINT launched PFM 10+ years ago. Today, there are 40M users in USA of fintech apps that access banking data via Plaid, Finicity, Yodlee, et al. In contrast, despite the regulation and the hype for years, EU Open Banking has fewer than 5M users. 

Angelos Michalos
Angelos Michalos - PaymentComponents - Athens 25 November, 2020, 08:00Be the first to give this comment the thumbs up 0 likes

"All change is hard at first, messy in the middle, and so gorgeous at the end." Robin Sharma's famous quote is so true about Open Banking. It is something so fresh and innovative for financial institutions that they definitely need time to understand the opportunities behind it. However, as in all new trends, the early-adopters will be the ones that will reap the benefits of the Open Banking!