A couple of years ago, Ron Shevlin predicted that banking would move to become banking platforms “much like how Amazon is a platform in retail.” Usually, it takes a few years for banking executives to latch on to Ron’s ideas. It’s no surprise then that the idea peppers many strategy documents throughout the US banking industry today.
There are some early signs that the US banking industry is moving towards this future state. While we can point to open banking and PSD2 in Europe, there are significant differences in the regulatory environment between markets that makes such a jump merely speculative. Instead, I point to two separate trends: banks publicly publishing their APIs, and early examples of banking platforms.
Publicly publishing APIs isn’t a new practice, but it is in banking. Without getting into the possible impact of the recent Facebook API controversy, some of the more forward-looking banks in the US have public pages where developers can access their APIs. This practice doesn’t constitute open banking, but a permissioned extension to the banks’ model. A developer applies for inclusion, downloads the API standards, builds experiences around the APIs, tests it in a sandbox, applies for certification, and then deploys with the bank. Some of the US banks that have published their APIs are doing it because they are international, like Citi, Bank of America, Wells Fargo, and Chase. However, there are others that have some international business but are focusing on building a US platform, like CapitalOne and Silicon Valley Bank.
Beyond the banks, companies that form the technology backbone of many community banks and credit unions have also begun to publish their APIs. FIS offers CodeConnect “a centralized fintech hub that gives developers access to the FIS product catalog in one central marketplace.” Similarly, Fiserv offers their DNAappstore “a collaborative community and online marketplace for trying, buying and selling custom DNAapps that enhance and extend the robust functionality of” their DNA® account processing platform.
Further, APIs are a topic of discussion for most bank CIOs, and increasingly throughout the executive suite.
Early adopter US banks and fintech firms have begun to build out partnerships that extend their initial capabilities. For example, Radius Bank have extended their usual community banking offerings, as they pivot to be a true digital bank, to include services such as Aspiration’s “pay as you wish” checking accounts, Mantl’s account opening, and Prosper’s online personal loans. Recently, PayPal announced an extension into traditional banking services through partnerships with “a Delaware bank handles debit cards, a bank in Georgia deposits checks that users take pictures of, and banks in Utah offer loans to customers and small businesses.” Other smaller fintech firms, like MoneyLion, have also announced entry into traditional banking products through similar partnerships with banks.
We will see banking-as-a-platform as a regular banking model alongside the laggards in the industry with a traditional model. Ultimately, where the future lies will depend on what resonates with banking customers.