Fresh from the recent conclusion Asian Financial Services Congress 2017 in Singapore, IDC Financial Insights has released its first perspective on API titled IDC Perspective: Moving Toward Open Banking APIs: Opportunities and Threats in Asia/Pacific Banking, which highlights 25% of Asia/Pacific banks will have an API strategy by 2018.
This IDC Financial Insights report covers the fundamentals of Open Banking API, discusses the key changes in the consumer behavior and business economics that compel banks to open their APIs to the external world. It highlights the opportunities and the unintended consequences that will impact banks’ IT strategies.
The report highlights the possibilities that API brings in for banks in the long term, and how the strategy to open their APIs will decide whether they are disintermediated by fintech companies and lose revenue to competition or they collaborate with third party providers and create more avenues of value and revenue creation.
Furthermore, the report also examines how Asia/Pacific financial institutions will deploy banking Application Programming Interfaces (APIs) and the current considerations of Asia/Pacific banks as they put together their strategies vis-à-vis APIs and some guidelines in these initial stages of deployment.
According to IDC Financial Insights, traditional financial services companies have to prepare for more customer-focused ways of providing customer experiences. APIs are one of them. In the long term for banks, the strategy to open their APIs will decide whether they are disintermediated by fintech companies and lose revenue to competition or they collaborate with third party providers and create more avenues of value and revenue creation.
"APIs represent fundamental shifts in IT — in how data is provided and used, how functionalities are developed and deployed, and what level of control customers have. This presents a massive shift in how the existing IT architecture can be made ready and customizable to accommodate the changing requirement without losing control over data,” says Michael Araneta, AVP, IDC Financial Insights Asia/ Pacific.
Araneta adds, “Banks' API strategies require an assessment of internal technical expertise, and identification of the right set of people who understand the impact of this change on future business opportunities and associated threats, including primarily IT security threats. New roles and capabilities need to be carved out within the bank to be future-ready for such a different future.”
"Open banking APIs will be inevitable as the approach offers so much to the customer, and banks will be compelled to offer these benefits. For the consumer, open banking APIs would mean visibility of bank-related information at one place, accessibility to personalized financial products and services without compromising security, and competitive and lower charges such as reduced charges on card payments and better rates on loan/credit products," ends Anuj Agrawal, Senior Research Manager, IDC Financial Insights Asia/Pacific.
IDC Perspective: Moving Toward Open Banking APIs: Opportunities and Threats in Asia/Pacific Banking (AP422925917) is the first in IDC Financial Insights’ report series. This report series aims to work as reference kit on open banking APIs for banks/ financial institutions, as IDC Financial Insights strongly believes that making API an integral part of a business strategy is going to be a must for any banking entity to stay relevant and ahead of competition in future irrespective of size and vintage.
The next set of reports will focus on highlighting the best practices followed as adoption strategy of open APIs in banking around the world and specifically in Asia/Pacific, which can work as reference guide for Top management of banking/financial institutions while formulating their API strategy for their organization.
For more information on this report, IDC Perspective: Moving Toward Open Banking APIs: Opportunities and Threats in Asia/Pacific Banking (AP42295917, March 2017), please contact Michael Araneta maraneta@idc.com, Anuj Agrawalanujagrawal@idc.com or your IDC account manager.
