OPEN BANKING & DIGITISATION: APIs A burning platform: Will established institutions find themselves in a precarious position?
Time for a reinvention An established bank, an integration platform-as-a-service, and a challenger, based in Benelux and the Nordics, consider the threat to the incumbent business model and what banks must do to change it APIs have been around for 20 years or more, but it is only in recent times that they’ve really punched their digital weight within the banking community. Through open banking, fintechs have been quick to jump on their potential, driving innovation and keeping up with increasing consumer expectations for digital services and capabilities. Conversely, many incumbent banks have been hamstrung by their legacy systems and have struggled to compete with disruptive fintech players. However, a ‘forced evolution’ is coming, whether they like it or not. For a perspective on the challenges facing larger financial institutions going forward and the need for a structural and cultural sea-change, we spoke to three significant players in this space. Mike Kiersey is director for global technology in EMEA at Boomi, which provides integration platform-as-a-service (iPaaS), www.fintechf.com
API management, master data management and data preparation, Flemming Laugesen, chief technology officer at Nordic digital bank Lunar, and Tom De Witte, chief information officer for international markets and head of core banking transformation for the Belgian universal multi-channel banking and insurance group, KBC. THE FINTECH MAGAZINE: How can larger organisations use open banking and open APIs just as effectively as the small, agile banks that have started to eat into their market share? MIKE KIERSEY: There is definitely a dichotomy here. The bigger organisations are very complex engines with many more cogs, versus small, nimble, high-speed versions of the bank, which have come straight in and adopted APIs; they don’t have the legacy of mainframe technologies. Clearly, the big banks are looking at the challengers,
seeing the innovation at work, and saying ‘how can we do that?’. The solutions will come from changing their internal cultures and IT. They’re the result of years of project-based deliveries of IT and IT services to deliver banking needs, rather than a more harmonised offering. But, at the same time, these challenger banks are growing and feeling stretch pains already. They are looking at their larger counterparts and asking ‘how are you guys solving these issues? What can we learn from you?’. On both sides, the journey is to see how they can adopt new, innovative technology and also deliver new patterns within that architecture, to release value more quickly and efficiently. TFM: How can those with a legacy culture use open banking more effectively? TOM DE WITTE: Technology is a lever to bring in a broader, better customer experience. Issue 21 | TheFintechMagazine
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