Issue link: https://go.axway.com/i/1321495
55 Open Banking APIs State of the Market Report 2020 The culmination of the threats over the past several years demonstrates that while banks may have thwarted individual risks, they have not established a more powerful position through their strategic manoeuvring. THREAT... BANK RESPONSE... LOST OPPORTUNITY Regulation mandating open APIs for core functionalities Create open APIs that meet regulatory needs • Creating a wider set of open APIs that generate new value opportunities. • Using open API infrastructure to build new partnerships with innovative market entrants. Neobank and fintech upstarts • Some updated user experience in their apps modeled on what they have learnt from the upstarts • Acquisitions to take over competition • Investing in creating their own neobanks still built on the traditional bank business model • Managing acquisitions as line businesses in the bank group rather than as new platform partners • Not leveraging the new acquisition's relationships to build out embedded finance and platform opportunities Loss of Small and Medium Enterprise (SME) customers • Allowed attrition • Some moves to widen online banking services for businesses but no ecosystem approach • Unbalanced approach to supporting government COVID-19 support loans • Supporting SMEs as channels to deliver their financial services to end customers • Supporting SMEs to access riskier alternative lending services through partnerships • Creating platforms through which they can study what services and products SMEs need in a digital economy Tech giants • Ignore them as a threat • Partner with them on vanity projects such as branded credit cards • Use their cloud technologies for neobank offshoots Creating a platform model in which they build resilient, diverse ecosystems that can withstand industry shocks in an Age of Transformation HOW BANKS HAVE MANAGED THREATS BUT STILL EXPOSED billion respectively, far beyond the valuation of many incumbent banks, even those that have already built their 'regulation compliant' open APIs. This is evident from the low number of bank platforms at present. NUMBER OF GLOBAL OPEN BANKING PLATFORMS WITH A PRICING PAGE (N=432) ASIA PACIFIC LATIN AMERICA USA & CANADA UK EUROPE & SCANDINAVIA EASTERN EUROPE & RUSSIA MIDDLE EAST & AFRICA 5 1 1 20 0 0 0 Number of platforms