Bank-As-A-Platform the future of banks
In the process of transformation, the banking industry is modernizing on a forced march. The winning banks of tomorrow will be those that rely on cloud technologies, data connection and service integration.
The banking revenue model suffers from several years of massive redistribution of benefits and market services. Since the 2008, banks need’s to regain consumer confidence, and have to fight against their aging image and their lack of agility in the face of new societal constraints.
Transformation is therefore inevitable, especially with the new regulations. The PSD 2 (Payment Services ) directive thus shatters the structural boundaries of the market by allowing the transfer of the value historically provided by banks to new payment providers with access to bank data.
Competition will therefore intensify with the NeoBanks and FinTechs, who offer an innovative user experience adapted to current behaviors. Banks and these start-ups have everything to gain from joining forces. 75% of start-ups say that this collaboration is their main objective, while banks can no longer just provide a simple mobile app.
Banks must reinvent their model.
Focus on the user experience and the customer journey
Imagine a car entering a gas station with connected and personalized services. Visual recognition automatically identifies the vehicle and its owner and links them to a user account with their preferences and behavioral data. A set of procedures (payment, invoice and promotion emails …) are activated automatically.
This scenario around connected cars illustrates one of the primary motivations for the transformation of banks: reinventing their relationship with customers. They are often perceived as falling behind on this ground, having undergone the mutation of the uses imposed by the digital and the GAFAM, these web giants which strongly anchored digital practices in the daily life of the consumers.
Personalization, contextualization, end-to-end user experience, digital forces banks to review their positioning in this value chain. According to a Deloitte study, 5 out of 10 French people are now ready to switch to an online bank (branchless, therefore), while 69% Internet banking applications and 29% on mobile banking applications.
Customers are also looking for specific practices, with new digital services combination that had never been associated before. Banks that have the ability to finely target a behavior, to offer a loan, to provide tax advice, to identify real estate as a means of remunerating, and then to help the client to find a tenant, will gain a certain advantage: offer an end-to-end integrated experience.
This dynamic can only be created under one condition: surrounding itself with an ecosystem of partners and opening up its Information Systems. Being able to establish these valuable connections to other banks including fintech and start-up, is a prerequisite.
Open banking: an’essential opening towards the ecosystem
Open banking is one of the biggest historical transformation projects for the banking industry. A real revolution that aims to reinvent the place of banks by moving from a closed model to economic, structural and therefore technological openness.
According to an Accenture study Open Banking is considered as a hight priority and strategic move for 75% of European banks
Open banking allows banks to interact and co-create efficiently and securely with an ecosystem of service providers via APIs, and thus generate value for their customers, strengthen their competitive position and set up new potential levers for revenue growth.
By opening their legacy system , where multiple technologies and languages are intertwined, the banks give themselves transform themselves by relying on the standardization via the APIs, these programming interfaces ensures the exchange of data or application flows between systems.
APIs and the overall concept of open banking have the direct effect of de-siding systems and decoupling front office and back office. The best way to build new technologies with legacy A royal road to connect advanced technologies to the historical system and to develop applications in line with customer expectations.
The PSD2 directive requires the opening up of banking systems, but some banks have decided to go further, with the aim of extending the scope of their APIs and strengthening their functional field towards more dense interfaces. Mechanisms promoting transparency, APIs have become the cornerstone of open banking and the first vector of transformation. They represent the indispensable channels for the creation of new partnerships.
The integration platform (iPaaS): a driver for the Bank-as-a-Platform
With the advent of modern IT, the cloud and its as-a-service model, and its growing complexity, the integration of services and applications is a foundation for all industries. How can you imagine linking a payment service to a connected car without having connected and secured the relations between these elements?
If accelerating value creation by relying on digital services is a priority, interconnecting these services in a hybrid environment (cloud and on-premise) should no longer be complex. In this context, the Integrated Platform-as-a-Service (iPaaS), or cloud integration platform, represents the technical and operational hub, and even the main engine of this Bank-as-a-Platform model. .
The Gartner research firm also sees the iPaaS segment as one of the fastest growing sectors in the infrastructure software industry. From 60% in 2016, the growth rate of the iPaaS has reached 72% in 2017. The time is therefore to the industrialization of intermediation and iPaaS has the primary function of fluidify.
For decades, banks have built an inter-application silo architecture, with an integration method where bridges are created only in a way and point-to-point, which certainly connects the systems, but is little flexible, little evolutionary and even less agile. With each new partnership, the ISD must indeed recompose its integration flows to meet the demand of business.
On the other hand, by technically federating an ecosystem and connecting the APIs on the fly, the Bank-as-a-Platform model allows banks to simply and quickly compose new offers with their ecosystem, without having to re-develop each bridge between the APIs of its partners. Banks thus enter the era of agility, with a re-usable and sustainable procedure.
This inherent replicability of the iPaaS transforms key services, such as payment, into a convenience. It is then easier to associate it with other services within the platform, to give birth to commercial packages, which bring together banking offers and associated services.
The Bank-as-a-Platform is the future of the bank
Banks must therefore question their model: do they want to opt for a unilateral approach to innovation, or do they prefer to capitalize on the strength of a growing and plural ecosystem?
Some banks have made their choice. For example, the Spanish bank BBVA has decided to monetize its open banking strategy by marketing APIs via its BBVA API Market. Crédit du Nord, for its part, is opening up by partnering with the Ellisphere company around an integrated PassBtoB offer, enabling the bank’s professional clients to access the financial and economic information of their partners. .
While APIs are the fundamental foundation for opening banking ISs, the iPaaS integration platform is the operational brain that will bring these interfaces to life in the creation of new value services. Would not it be the shortest way to customers?
