Open Banking PTBR

State of the Market Report 2018

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FROM BBVA'S STARTUP SCOUT PROGRAM OVERVIEW DANSKE BANK'S THE HUB PLATFoRm oFFERS RESOURCES TO FINTECH STARTUPS. 2. Using RISK to Maintain Industry Advantage Over a shorter time than if a bank goes it alone, they will have a wealth of information on what products and features are resonating the most with customers, and how customers want those new features delivered to them. If a bank has built the experience layer right, APIs may have been released for specific niches (what industry analyst Paul Rohan calls microsegments) rather than for the industry sector and market as a whole. Banks could now take on a RISK approach, by choosing a tactic from Rally, Invest, Steal, or Kill. Rally: With an ecosystem of third parties that are using a bank's APIs to deliver new products to a specific target customer segment, a bank can watch which startups are building strong customer bases and high demand products. The bank can rally together with these third parties in closer partnerships in order to strengthen the offering they provide to the market. In the banking sector, you can see this at the moment with banks like ING in Europe working with online lending startup Kabbage to offer loans to online customers, and the new partnership between TransferWise and BPCE. This is also what you can see at BBVA startup scouting program, and what Danske Bank is doing with its Hub concept, that provides supports and platform services to early stage startups. Invest: Instead of partnering, another option is to invest or acquire a startup that is proving successful. This often has the benefit of bringing in expertise in customer experience and lean innovation methodologies as well as the products that the startup has been building and the market share they have been carving out. Again, with the banking sector, this can be seen with JP Morgan Chase's acquisition of API-driven payments platform WePay. We can see that out of the 20% of top 50 bank-acquired fintechs in the past 5 years, all were at some point exploiting APIs, or scraping bank's websites. Steal: As the saying goes, good artists copy, great artists steal. Using this tactic, an enterprise can see how startups are using their experience APIs and then pretty much just replicate that approach and offer it to their own clients. Startups know, and are not especially afraid of this risk. "The big banks will try and copy everything we do," Starling Bank CEO Anne Boden has said, for example, while Nikolay Storonsky, CEO of Challenger bank, Revolut, has said: "They may copy some of our savings products twelve months after we have launched them, but by that time we have three or four other features in this area and we're moving onto the next big thing." Danske Bank and BBVA are two examples of banks seeking to onboard fintech as future ecosystem partners 10 State of the Market report 2018

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