I recently had the good fortune to collaborate with Finastra on a white paper titled Corporate Banking APIs: Open for Business.

As the paper points out, application programming interfaces (APIs) are starting to significantly disrupt corporate banking. Nearly nine in ten (86 percent) banks are working on Open Banking and open API platforms, and nearly half (47 percent) of corporate treasurers see opportunities for banks to improve their product offerings to provide innovative solutions that go beyond traditional services.

These findings should make it clear to banks that they have an opportunity to roll out Open Banking and API innovation, as corporates are ready for this change.

Small- and medium-sized enterprises (SMEs) and larger corporates stand to gain from increased connectivity and access to broader and deeper ecosystems. In the Open Banking environment, the conceptualization, creation and distribution of new and innovative banking offerings can be decoupled from ownership of the product or account. In fact, the 2018 Accenture Open Banking for Businesses Survey (which polled more than 660 businesses, split equally between SMEs and large corporations) found that 35 percent already participate in Open Banking platforms and an additional 42 percent plan to do so within 12 months.

It also revealed that 40 percent of large corporates and 31 percent of SMEs were already using Open Banking platforms. Similarly, the IDC Global Corporate Treasury Survey (2019) found that most corporate treasurers are already making progress toward leveraging ecosystems. Forty-four percent said they integrate internal and external data to optimize decision making and 33 percent said they source best-of-breed solutions from their ecosystem.

These findings should make it clear to banks that they have an opportunity to roll out Open Banking and API innovation, as corporates are ready for this change.

As we noted in the white paper, they want their banks to collaborate on innovation with third-party providers (TPPs) so they can:

  • Gain access to convenient and innovative banking services
  • Expand their customer base and partner ecosystem, and reduce the cost of new customer acquisition
  • Optimize process efficiency
  • Reduce the complexity and implementation costs of banking connectivity

Open Banking will not solve all the problems facing banks. Rather, it should drive the industry to make needed changes, including shifting from a controlled distribution channel approach to a multi-channel model, differentiating customer experiences, building and collaborating within non-banking ecosystems and leveraging their vast quantities of data. In the context of these changes, open APIs can help banks efficiently exchange data while effectively serving clients.

While banks in the UK have a lead of perhaps 18 months, others are moving to explore the potential of Open Banking.

In the second part of this blog series, we will look at the emerging business models that banks are examining as they assess how APIs can help them expand their ecosystems, broaden their offerings and differentiate their approach to the overall corporate customer experience.

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