Open banking, a path for your company's digital transformation
Digital transformation, industry 4.0, involves a radical change in business organization and culture. The widespread use of connected devices and digital platforms and the large number of technology consumers have led to a boom in business opportunities. However, these opportunities have also become more transient and selective.
To win in this type of situation, businesses must undergo a major digital transformation. Spain is currently behind the Europe digitalization average, according to data supplied by Accenture and Mobile World Capital Barcelona in their latest joint report. The report also states that the Spanish GDP could increase by 42.6 billion euros (up by 3.6%) by 2021 if businesses were to accelerate their digital transformation. And APIs are the strategic levers which enable these opportunities.
These optimistic figures, the free-of-charge nature of many of the tools and the democratization of models such as open banking pave the way to digital transformation.
At the moment, it is primarily large businesses bringing this change closer. Their experience opens the door to capitalizing open banking as a catalyst for the digital transformation of businesses. By utilizing APIs, the banks moved to the center of a connected digital ecosystem where all kinds of businesses cooperate to create new and better applications with shared resources and knowledge.
From banks to SMEs and start-ups
Implementing an API strategy is not exclusive to large businesses or technology sectors. Any business may adopt it and benefit from all of its advantages. And there lies the magic. No matter how wide a target approach an API is designed with, business owners will be in the best position to conceive better applications. On January 20, Programmable Web listed 20,728 APIs with only 897 of them specific to the banking sector. From this, we can infer that these APIs can be the basis for countless possible combinations and new developments.
In fact, APIs bolster practically all modern digital transactions, from responding to emails to mobile shopping to logging a customer's interaction in a CRM system. The most frequently and efficiently used APIs in digital transformation are financial APIs. The most advanced SMEs have started by choosing all interfaces linked to trade, e.g. making payments via the POS without the POS and funding a customer's purchase from the POS. But there are others...
BBVA was one of the first companies to be fully aware of the depth of this change. The business joined this transformation by creating BBVA API Market, a platform on which it offers 18 financial APIs to help anyone who wishes to improve their products and services and to promote or create new business lines in three markets: Spain, USA and Mexico. They allow companies, start-ups and developers to launch new products and services by integrating financial services for BBVA customers into its applications, provided that they give their consent.
BBVA API Market features three levels: testing, basic and full. The available APIs include APIs focused on the customers' identity and their path of expenses; and APIs which analyze the customers' payment culture, explore higher levels of transfers, connect with China, collect and study aggregated data and send notifications in real time.
For example, PayStats leverages the bank's aggregate big data. From the analysis of this anonymous information, merchants discover their customers' shopping times, origin and preferences, among other data. Alipay enables Spanish establishments to offer this channel to Chinese tourists. Personal or retail banking APIs made it possible to access the data and operations of BBVA customers who have given their consent. Consequently, their experience is maximized and the conversion processes are boosted. Customers, Accounts, Cards, Payments, Loans and Notifications help to create added-value services for customers.
This cooperation between banks and start-ups via open banking has borne fruit, including Geoblink (specializing in geomarketing, it helps KFC, LA Tagliatella, Toyota, Klepierre or Eroski select the best site for their next store) and Simple (one of the top U.S. fintechs purchased by BBVA in 2014).
Aside from BBVA there are countless examples, and not all of them are financial, since they depend on an inexhaustible volume of resources which facilitate as wide a range of integrations as our imagination can devise: e-commerce platform hosting a marketplace, CRM, accounting or POS in a single solution.
Luiza department stores in Brazil opened their API platform to third parties while demanding that their sales went through Luiza's e-commerce platform. As a result, the business gained new customers at no cost while increasing its referrals to 35,000 in just a few months. During 1Q 2018 alone, the company grew by around 66% to 1.5 billion reais (351 million euros) despite Amazon's successful penetration into the region, as explained by Apigee Compass in The Digital Transformation Journey.
Like Luiza, there is an increasing number of businesses creating their own marketplaces. E-commerce APIs are used to automatically post their products in other markets and to direct customers to related shopping. Amazon
is one of the better known players.
As explained by Francisco González (former Chair) about BBVA's digital transformation, "the perceived leaders of digital transformation will have better growth and profitability outlooks, which will give them the technical and financial capacity to leverage the consolidation process by attracting talent, enhancing their reputation among their customers and suppliers, and increasing their share in a much wider and truly global market." And Francisco González is talking about a sector which resists change but has been able to harness its own depth to take this huge leap.
Sign up to the BBVAOPEN4U newsletter and receive tips, tools and the most innovative events directly in your inbox.