The concept of “Big Data”, which has been pelesenk in everyone’s language for some time, bring to mind various algorithms and analytical software.
Although these are important for ing meaning from data, much more important is to be able to access it.
From a commercial point of view, they are the catalyst for us to create new business models or products.
Banking and Telecom will undoubtedly take the top 2 when sectors are examined in terms of data density. At this point, the concept of “Open Banking” is borne out in the banking sector.
Open Banking is basically a business model in which banks talk 2 or more systems through APIs to deliver more different and advanced capabilities (new business model, product, service) to the market.
Until now, APIs have been widely used in the form of financial accounts, while today they have been used to improve customer experience, create new revenue fields, and establish sustainable new business models.
APIs Provided by Banks
In a report, McKinsey handles API models under 3 main categories. These are for entrepreneurs, partners/ B2B customers and internal customers.
Thanks to the APIs provided by the banks and the data in the testing environment, entrepreneurs develop their own products and services, making them able to expand in the market both for the bank and for themselves.
Another model, Partner/B2B APIs, aims to provide a variety of solutions to banks’ corporate customers. Nordea made its first breakthrough in this field at the end of last year.
Nordea’s portfolio now includes an instant financial reporting solution for its corporate customers and provides this through its APIs.
Finally, Internal APIs are used to talk to one another in-site systems. In fact, they are not much different from the web services within the institution.
3 Types of APIs for Open Banking
In one of Forrester’s studies, we also found that API models are discussed in 4 main categories.
Although these are technically the same, they differ in their naming according to their usage area and users.
It is normal for each financial service provider to come up with models of their own.
However, what is really important is that they are centrally managed and standardized clearly.
Basically API platforms are examined in 5 areas within the scope of implementation and infrastructure (the following example represents this).
Each area has its own design and documentation. The lack of even one of these will cause the process to not be managed effectively.
These are issues that apply to each bank without exception. When the strong banks in this area are examined, it is seen that the relevant managers make comments in parallel with them.
The biggest obstacle in this process is the old systems that can not keep up with today’s demands.
On the one hand, banks are trying to deal with it, while on the other hand they are setting up central teams to manage the process effectively.
To keep track of global examples, it’s worth reviewing Innopay’s (updated) Open Banking Monitor study this month.
This company, which I interviewed personally, has been working on digital transformation especially in the Netherlands for some time.
They also evaluate API portals according to various criteria (which are in English). There are also 2 examples from Turkey.
EMEA Digital Banking Maturity 2018, Deloitte
Deloitte’s EMEA Digital Banking Maturity 2018 report shows that Turkey is among the Digital Leaders. This actually shows why the FinTech ecosystem in Turkey is not maturing like globally.
Banks in Turkey are focused on managing many digitization processes inside and not receiving support from outside.
However, it is open to debate how much more sustainable this situation is.
As an indication of this, it is the need to evaluate the banks with API portals in Turkey, the number of APIs owned by these banks and the competes of these APIs.
It is important to note that the large number of APIs does not make sense.
The important thing is that there are APIs that have sufficient functional competence and are built to certain standards.
Otherwise, it won’t make much sense to share APIs that only show the location of ATMs. (At this point, it is worth reviewing the standards prepared by the Berlin Group)
The active activity of global banks in this area has caused regulatory organizations in Europe to take action at this point. The following table is a clear indication of this.
In summary, if we explain what should be done in open data banking;
- Determination of Open Data Banking strategy
- Make sure legacy systems are not an obstacle in this way
- Establishing a central team (not limited to researching the market or making technical improvements, it is the responsibility of this team – a restructuring should be created to manage the end-to-end process)
- Proactive approach, not reactive, against regulatory organizations
- Without waiting for fintechs in the industry to come to you, you go to them (the first action to be taken here is to interview marketing teams and find Fintechs in the industry for needs)
As we are constantly talking about the digital economy today, we will gradually be talking about the open banking economy by entering a sub-break of it.
Finally, it’s a good idea to leave a little note. In particular, the local data represents the period in which it was investigated.
The values may have changed now. There is no criticism or praise for any bank.