API’s aren’t the rails for the next financial products. They are the next financial product.

For too long, Open Banking has been treated as a technical and legislative affair. As long as we are implementing the PSD2 API’s and negotiate the requirements from the European Bank, we should be Ok right? Or we can use API’s to collaborate with our fintech partners! There you go, we got the lingo right … let’s put marketing on it! 

As I was preparing yet another session about API’s and Open Banking I was having a discussion with my son who studies economics, and we discussed the basics of sales and economics. Suddenly it hit me … as a market, we are missing an opportunity. API’s aren’t the rails for the next financial products. They are the next product.

API’s will be a cost center and ‘just’ the next I.T. project until we start building an API economy. So what does it take to turn an API into a financial product?

A value proposition

I have heard the term VPI for “Value Programming Interface”. That’s a bit clunky isn’t it, but it makes a point. If we want to monetise API’s, we want customers to pay for them, then we better make sure they bring value. Not marketing value. Sales value. Value to the customer. Key is to select which API’s to go to market with first. Does it have to be an API unlocking your newest machine learning virtual reality distributed innovation trading platform populated by chatbots wearing apple watches and google glasses? Maybe you can make more short-term money from an API that lets fintech partners be a channel for the short-term loans you are so famous for?

A go-to-market strategy

It’s economics 101. The marketing mix, the target market, the (API) product strategy, the bowling alley. The whole 9 yards. All that for an API? Yes sir. All that for an API. How else will you monetise?

A pricing strategy

I know, that’s part of the go-to-market strategy, don’t go all semantic on me now. But pricing deserves a separate discussion because it’s so important. And … so difficult. I will go out on a limb immediately and say that there is no bank today that has gotten API pricing nailed at scale. There’s no MBA class that teaches API pricing. There’s no empirical data. You don’t agree? Prove me wrong, please. You’re a student? I’ll be happy to collaborate if you decide to do a study.

A new organisation

No, I’m not calling for a reorganisation of your sales force. I mean a new, separate sales force. This is a new business. The same is true for other parts of the organisation. Now you have a retail bank, a commercial bank and an API bank. Am I taking this too far? Maybe, but now ask yourself the question: is your historical organisation the right place to set up a brand new business?

Air cover

As a banker, would you set up bookstores without your board and your CEO approving your business model? And before you accuse me of next-stage silliness … that’s exactly what Amazon did when they decided to set up payment and merchant services, didn’t they? So now, if you’re being asked to build an API, request to go see your board and your CEO. 

Within the Industry Solutions Group, we have been working really hard to build an API-based Digital Innovation Platform and collaborate with fintechs and banks. 

This week marks another edition of Oracle Open World, Oracle’s global users conference. The Oracle Industry Solutions Group has chosen Open World to unveil the Open Banking Platform that has been built on Oracle’s Cloud Platform.

The views expressed in this blog are my own and do not necessarily reflect the views of Oracle.