4 charts, Member Exclusive
4 charts on retail banks moving to platform-based business models in 2020
- Study finds banks with platform-based business models more likely to survive new digital demands from customers
- Retail banks struggle with shedding legacy systems
The report emphasizes the importance of building an API network that drives collaboration with ecosystem partners in enabling new products/services and building customer loyalty. More importantly, however, is to support a network of standardized APIs, which are interoperable, built on consensus, and work for all ecosystem participants. Adopting a standardized API for financial data sharing – such as the FDX API – won’t only keep development costs low and foster market choice and innovation, but ensure your firm needs to maintain just one API vs. sustain a costly maze of proprietary data sharing methods.
A platform-based or open API approach is vital to the success of retail banks. Regional and community banks, in particular, are struggling to compete due to outdated systems. Since replacing an entire legacy core banking system isn’t always realistic, a platform-based approach enables banks to improve one piece at a time. The banks that I have seen do this successfully set clear goals for their institutions, such as raising $100 million in deposits in 5 months, and then build their digital strategy and vendor selection process around these outcomes.
We are at the beginning stages of unbundling banking infrastructure. The next big wave in fintech disruption is sure to be felt by the legacy vendors that have grown complacent by the lack of competition. And this will hopefully lead to a shift in banks viewing technology purchases as investments and not solely as expenses.