Are Open APIs the Stairway to the New Payments Ecosystem?

Losing yourself in music is something that everyone should do at least once a day. The freedoms that it affords one’s mind cannot be understated. In my eclectic (and eternal) playlist, there is one song that has likely been played at least twice as much as any other (and to be fair, it likely has the same global play counts); Stairway to Heaven by Led Zeppelin, an epic song that helped define the band to generations. But it was this past week when listening to the song when my mind was turning over thoughts on banking, and a line jumped out at me with new meaning; “There’s a feeling I get, when I look to the west…” While Jimmy and Robert were musing over much larger questions about life and death, my current journey had me subconsciously thinking about banking.

We have all talked, and many with animated excitement, about where we are in our industry and the state of disruption and transformation of what ACI terms the New Payments Ecosystem. Many of us have agreed that change is upon us, and almost as many agree that no one knows for sure what that new landscape will look like. The immediate impact of Open API technology on banking is evident in the use and business cases that seem to emerge on a daily basis. This is partly because banks are forced to be more open by regulation such as PSD2, but also partly due to a need to be more open in order to form partnerships that deliver the new services our customers expect. We see the effects of these wider trends in the application of (not yet fully open) API technology to open up the payments schemes, and the move away from proprietary protocols and networks. It’s not just the more established tech we have to get our heads around. Often over-hyped, but likely to have lasting-impact, are distributed ledger technology and blockchain, which will both thrive in this new open market. New technologies will drive drastic change in the industry. To quote a later line from the now firmly-planted earworm; “And a new day will dawn, For those who stand long, And the forests will echo with laughter.”

Financial institutions, retailers, technology providers, new entrants and incumbents have all arrived at this interesting crossroads in their respective journeys. The New Payments Ecosystem that is emerging—and the opportunities it affords—look, feel and are different from the existing world. The roles that each participant played and fine-tuned over a generation are suddenly being challenged, augmented, adjusted or replaced, which is both scary and exciting. This disruption has everyone in the ecosystem looking closely at their approach to the market, realigning to the new opportunities that this ecosystem presents, and adjusting their business models to meet the new demands of this space.

Jimmy gives us all hope though; “Yes, there are two paths you can go by, But in the long run, There's still time to change the road you're on.” We are all on the early part of this journey, and we do have choices on the routes we are going to take, part of that is embracing the start-up mentality of agile development and fast-fail models. It’s time for all of us to roll up our sleeves and start playing with new ideas, new technologies and embrace the journey…And who knows, maybe it will lead us to the magical staircase—to the promised land of banking that Led Zeppelin were clearly singing about!

If you want to talk 70s classic rock, or indeed Open APIs and digital banking, catch me at EBA Day 2017 on Stand 30.