Open Banking PTBR

But the strategy of banks here is not to be the first to launch new features. That is not possible. But thanks to API management services as part of their stack, and their nurtured startup ecosystem that makes use of banking APIs, they will be able to identity new successful features based on how their assets are used by their API consumers, and they will be able to scale effectively, which is the main challenge for startups competing against them. Banks are slow movers, but fast and strong followers. When they move, it is late but it is strong. The role of API management in open banking is to reduce the lateness and increase the accuracy of a bank's every move. Kill: It is your data, your assets, your infrastructure. While we do not personally recommend this strategy, as it can destroy the fledgling ecosystem that a bank might be cultivating and create long term distrust amongst developer communities, there are industry examples where businesses have offered third party APIs and then once the business has seen how they are used in the market, they have then cut them off and used those learnings for their own business strategy. Unfortunately, the examples that spring to mind are more from businesses that once started as startup disruptors themselves. Twitter famously dialed back its APIs once they saw how they were being used. LinkedIn and Crunchbase once scraped business data from other sources and have since chased after businesses that have sought to use their own APIs as a BI firehose, and Netflix cut off their API and moved to internal APIs. Most recently, Google Maps has increased its pricing policies for its API to such a level that it may end up killing a number of startups simply by pricing them out of the market. Learning from History: Platforms Have Proven the Model in the Past 20 Years The approach suggested above — first working on a strategy with APIs, and then applying RISK tactics — is the next horizon for open banking platforms as they grapple with implementing their new banking stack. There is nothing standing in the way of banks, who already own much of the vertical slice, from implementing this model. And history shows us that if they don't, others will leverage customer experience and do it instead until those new upstarts gain significant market share. That's definitely how Stripe built themselves into a $20 billion valuation. When Stripe started, all banks had payments services. All of them, without exception, had the infrastructure that Stripe needed to build to succeed. But because banks weren't focused on providing experiential APIs for developers to use to make payments frictionless in apps and websites, Stripe was able to come along and created that digital infrastructure. So that was a $20 billion API opportunity that banks missed. This is what industry enterprises are most scared of with startups: that they will become a platform that takes significant market share, rising up through customer experience first and then building out. The question now is not whether incumbent banks can do anything about the next platform upstarts, but more, are they willing? 11 The RISK STRaTegy

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