Experts tell us, the financial services landscape is being redefined by many disruptors in the FinTech industry. Financial service firms that want to remain competitive, thrive and create a future proof strategy, must consider embracing open banking APIs.
Financial services firms are experimenting with, testing, and ultimately seeing the value of Open Banking initiatives and the important role of APIs.
“Traditional banks are beginning to understand that in order to better compete in the industry, they must develop their digital capabilities to avoid being left behind by the innovative new players, with superior offerings and services”, said Deltec Bank
“Financial services firms are experimenting with, testing and ultimately seeing the value of Open Banking initiatives and the important role of APIs”.
Open banking initiatives
For many of the financial service firms in Europe, Open Banking initiatives are gradually becoming the norm, especially because from 2018, banks will be legally obliged to facilitate access to account information through APIs, per the Revised Payment Services Directive (PSD2).
Around the world, the industry is starting to recognize that Open Banking is redefining the financial landscape in a number of ways, specifically by helping financial services firms enhance service offerings, improve overall customer engagement, and increase revenue from new channels.
The rise of banking platforms
Historically, banks provided financial services to people and businesses in local towns. Because these regional ecosystems were tailored specifically to the needs of local customers, branches had served their communities well for generations and grown accustomed to owning many aspects of the customer experience.
In today’s digital era, however, customers are no longer limited to offerings in the local ecosystem.
Customers who bank with traditional institutions increasingly manage their finances via apps rather than brick-and-mortar branches, and new, digitally native fintech companies are increasingly taking over and improving the functions that used to belong to legacy banks.
The API revolution has come to finance and it is been nothing short of transformative. Where just a few years ago there were only a handful of fintech startups, this space has exploded in recent years, producing dozens of fintech successes, with many more to come as banks open themselves up to collaboration.
Mich of FinTechs success has been driven by the power of APIs.
“The API revolution has come to finance and it’s been nothing short of transformative”.
Let’s take a look below at how Stripe is using API’s to put themselves right at the center of this new marketplace.
While PayPal famously paved the way forward in payments, Stripe has refined and perfected its business model enabling users to accept, keep track of, and schedule payments online.
Created with the developer community in mind, Stripe has superb documentation capabilities, along with a reputation for being ready out of the box, which means integration is simple and virtually pain-free.
Lastly, Stripe offers robust multi-currency support, which means that even local businesses can look at harnessing customers from all across the globe.
One concern is the fragmentation of the market-leading, leading to complete mayhem for control bodies if the proliferation of banking platforms is not somehow maintained within the regulatory landscape. But you cannot beat innovation and if these new platforms are pushing the boundaries than its fair play.
Disclaimer: The author of this text, Robin Trehan, has an Undergraduate degree in economics, Masters in international business and finance and MBA in electronic business. Trehan is Senior VP at Deltec International www.deltecbank.com. The views, thoughts, and opinions expressed in this text are solely the views of the author, and not necessarily reflecting the views of Deltec International Group, its subsidiaries and/or employees.
About Deltec Bank
Headquartered in The Bahamas, Deltec is an independent financial services group that delivers bespoke solutions to meet clients’ unique needs. The Deltec group of companies includes Deltec Bank & Trust Limited, Deltec Fund Services Limited, and Deltec Investment Advisers Limited, Deltec Securities Ltd. and Long Cay Captive Management.