Open banking, APIs and Banking as a Service are increasingly common concepts in the financial world, partly due to the promotion of the new PSD2 European directive that establishes new rules of the game in which financial institutions must open their data to third parties so that the customer benefits from greater competition and better services.
BBVA has been working for a long time to lead open banking. Ricardo Segoviano, Head of BBVA API_Market, explained that long-term commitment recently at Open Expo, which is a conference for professionals of free software and open technologies that was held at the beginning of June in Madrid.
Segoviano explained that BBVA has been launching various initiatives since 2013 to innovate and adapt to the environment that it has been forming. But probably the most important step has been the creation of its Open APIs platform, launched commercially in May 2017.
That commitment to open banking had a lot of work behind it. "In the pilot phase, we invited around 200 companies to try use cases and solutions. We wanted to experiment and learn, and several lessons were learnt from the experience," explained Segoviano.
Segoviano summarizes everything learned in these years of work in six conclusions.
- Open banking is not just a matter ofAPIs. You have to have a global vision, and financial institutions must take into account not only the customer's user experience, but also the developer's.
- To move forward in this new environment, banks need the direct support of top management, since it is a total transformation of the bank, from all points of view.
- The APIs market has still to be consolidated. "Demand is there, supply remains limited and prices have yet to be set in the market," Segoviano explained.
- The possible business models and their concrete formulation have also to be outlined. "There are many possibilities, but they are not obvious. When you collaborate with people who have different perspectives, you arrive at ideas that you had not even considered," Segoviano said.
- Although it gives the impression that the PSD2 is open banking's main engine, the paradigm shift in the banking business is much deeper.
- There is a lot of commercial education left to do. "The end customer will still take time to assimilate what is happening and allow access to their finances, and younger customers will entail a lot of work," predicted Segoviano.
While the market consolidates and grows, BBVA already has a leading position in Open APIs, with 10 solutions inBBVA_API_Market. Segoviano considered the PayStats case of use in particular, which offers retailers detailed information on consumption patterns by retail areas, with which they can, for example, optimize their advertising campaigns and choose the best location, with data, for their stores.
They are examples of economic transformations that are already here thanks to APIs, but Segoviano closed his talk with an overview of open banking. "All this is here to stay, and banks should opt for collaboration models. We have to change our way of thinking and create opportunities for our customers."