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APIs are the key to the survival of banks as ‘platforms are eating the world’

APIs are the key to the survival of banks as ‘platforms are eating the world’

Louise Jones


Money20/20 in Amsterdam was this week the vibrant center of the payment sector. The largest fintech event in Europe drew 6,000 fintechs from 82 countries. Traditional players also attended the event, such as the Dutch bank ING, whose CEO Ralph Hamers gave the opening speech.

For years, finance events like this have raised the question of what the future of the financial sector and of banks in particular will look like. Over the years, finance experts have presented a wide range of possible solutions and visions for the future: from Artificial Intelligence to cryptocurrencies and from machine learning to Blockchain.

According to these experts, banks have a wide range of possibilities, but at the same time it is difficult for bankers to assess where the focus area should lie. Which solutions are nice-to-haves and which developments are crucial and contribute directly to securing the future of banks? It is not surprising that banks are distracted by all those (technological) developments. This could lead to mistakes, as banks might set the wrong priorities.

Outstanding message

The good thing about this edition of Money20/20 was the fact that speakers not only came up with visions of the future, but there were also financial stakeholders with concrete plans and use cases. You could say that we are gradually shaping the financial future. For example, a large number of experts agreed on the future of banks. They pointed explicitly towards a future world that is driven by APIs. To stay competitive in an Open Banking era, we need to make banks part of the platform economy and stimulate the delivery of better and more flexible APIs by banks. This was the most eye-catching message that I remember after attending several sessions and after talking to various experts.

“They say that software is eating the world, but we believe it is more appropriate to say that platforms are eating the world”, said Tony McLaughlin, Emerging Payments and Business Development at Citi in an interesting session about new commercial models in payments. With this statement he expressed what I have heard several times at this fintech event in Amsterdam.

McLaughlin's vision is thought-provoking. He states that a bank can have its own innovation laboratory, research the benefits of the latest technologies, collaborate with fintechs and have proof-of-concepts with regard to all new trends, but if that bank does not focus on the transition to the world of platforms, it faces a bleak future.

Future API-driven platforms

According to McLaughlin, if banks wish to remain relevant, they need to publish the right APIs to deliver financial services to consumers and businesses transacting through e-commerce platforms. Basically, banks need to ensure they are the financial layer of the API economy. An audience poll showed that 58% said that open APIs are the emerging technology with the biggest impact in the next 5 years.

From what I heard at Money20/20, you can say that APIs are the key to the survival of banks in the platform economy. In this case, banks should consider Open Banking an opportunity and not just a compliance project. European cooperation and standardization of infrastructures throughout Europe might be necessary.

This is an interesting thought and the future will show whether we are indeed moving in this direction. To be continued. Other than that, it has been a pleasure to visit Money20/20 again. Hearing established industry leaders and innovative fintechs from across the globe share their visions has been interesting and inspiring. Thank you all.