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Like an Extranet, Partner API’s are limited to specific parties, often for a very specific purpose like providing a product / service. Technically the API is no different to a public API, but access to the API will be limited typically using a 3rd party API gateway solution. Partner API’s are usually monetised, and this can be achieved in a number of ways e.g:
This might be by individual or bundles of calls, or through a subscription charge for access (e.g. see https://algorithmia.com/) . You may even decide to give access to a subset of API’s away for free so as to try and sell “premium” services later.
The charge can also be built into the API itself, online payment platforms that take a percentage of transaction values are a good example of this.
As above there are many ways to do this: Banks are already used to selling 3rd party products and taking commission or introducer fee’s on products like insurance and credit cards: API’s make this easier.
You can find a good discussion of monetisation models here.
You might create partnerships simply to create a new value chains that increase customer loyalty e.g. make it easy for customers to use a P2P Lender within the banking service rather than customers having to create a separate relationship with them. The bank will also benefit from a better understanding (data) of the customers financial activities. Driving innovation is also an objective for many banks. Hence increasingly banks are creating their own API Marketplaces e.g. https://www.bbvaapimarket.com/ or https://developer.capitalone.com/ ).
Increasingly banks are looking to differentiate their offering through “vertical integration”. This is where banks will use API’s to integrate 3rd party products and services to augment what they provide. This may be purely financial providers or others that help the bank target very specific customer journeys or segments. For example Monizo (UK) and Kumsal (Turkey) both target different segments of business banking and augment their banking service with other services that are useful e.g. tax filing and expense tracking.
Hence in looking at your API strategy remember it’s not just about what you publish, but also about what API’s you consume from 3rd parties. Choosing your partners is an important decision, especially when you own the customer relationship. Some of the things to consider when selecting a partner:
Partner API’s may be part of your overall API strategy or managed quite separately from others (Public and Private API’s), either way they are going to play a key role for banks going forward and need to be managed accordingly.
Key Take Aways
The next post addresses the 3rd type of API’s, Private (internal) API’s – sometimes known as Enterprise API’s.
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
Alex Kreger Founder & CEO at UXDA
22 August
Nick Green Director at Purple Patch Broking Ltd
Priya Kumari
20 August
Oleg Stefanet Chief Risk Officer at payabl.
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