The Bank of the Future is Platform-Based
By Dr. Sebastian Wedeniwski, Chief Technology Strategist, Standard Chartered Bank
Imagine an app that not only transfers money and pays bills, but also helps you buy a car, a house, insurance or even to send your child to a university abroad; allows you to read reviews of a restaurant or movies; and assists you to make reservations or bookings. All these can be done through one platform and a single app. In the not too distant future, you can look forward to a platform with integrated Application Programming Interfaces (APIs) covering cross-industry services, including banking, all in one location.
That is where banking is headed – creating or assembling platforms that go beyond the traditional financial services of monetary transactions and protecting and growing your wealth. Banking becomes almost invisible and fully integrated into our daily lifestyles, which may range from having a virtual chat to transacting, all on a common platform.
In this new environment, users will be able to efficiently manage their financial assets based on their specific needs anytime, anywhere, and on any device. With contextual integration, they will also receive real-time notifications on account and market-related activities, such as transactions, account balance, or market movements. The immediacy of service will help them to act swiftly and accurately.
Currently, products and services by banks are primarily offered through their own channels, delivered with the assistance of Relationship Managers. But as clients’ expectations evolve to managing things digitally, this is all set to change. Banks will be developing their offering through their in-house platforms or via third-party platforms.
The essentials required to create the platform
The answer to achieving this all-in-one design is an open-platform architecture where APIs connect the bank to other services from multiple industries. As smart APIs within each industry become integrated, clients will be able to access an extensive variety of products and services. This integration can also help product and service providers assess their clients’ needs and risks.
The platform will work as a network of partners, products, and services from various industries and will help build trust among institutions. The transparency of information and data will assist clients in their decision-making. Clients can easily select a financial product and have it tailored according to their needs and inputs. This transparency and personalised service will, in turn, improve compliance, which is increasingly important in a digitally connected world.
For example, within the bounds of privacy legislation, a bank could potentially allow insurance companies to integrate its app with their platform and vice versa. This integration will enable insurance companies to quickly evaluate the risks of a new client, if the client is known to the bank. Insurers could obtain information to improve risk analysis, which could result in the client being offered a lower insurance rate. This openness of data and integration through APIs can assist both clients and companies. However, clients should be aware of and have control over the sharing of data.
It’s all about collaboration
From a financial technology’s perspective, for the platform to succeed, banks must engage and collaborate with external developers for all types of business innovations. The main aim is to encourage co-creation because an independently-created industry API catalogue will never be comprehensive enough to develop the scale required to build an exponentially growing business.
Banks must provide a safe, open, and conducive playground to allow developers to experiment with innovative business and technology products or services. However, this environment should be within a well-defined space and duration. It must include appropriate safeguards to contain the consequences of failures while maintaining overall IT security and stability. These are the key technology capabilities for an open-banking model. Eventually, the platform should not only deliver value to clients, but it should also enable developers to create value for clients.
Undoubtedly, the future of banking is changing fast, driven by massive technological transformation. This ongoing revolution will fundamentally alter clients’ access and use of financial products. An open-platform architecture is paramount for a bank to serve the present and future needs of its clients.