Creating A connected digital ecosystem via Open APIs

By Ghita Sqalli, Head of Product Marketing – RedCloud Technologies


With the PSD2 legislation announced in the U.K. and EU for 2018, European banks are feeling challenged by the requirement to open their payments infrastructure and customer data assets to other banks and technology companies, allowing those to make revenue from payment and information services.

It doesn’t necessarily need to be that way, and challenger banks have it all figured out. By opening their Application Programming Interfaces (APIs) to third party services providers, they are becoming open banks on their own terms. Banks all around the world can now join the game and enrich their closed legacy core banking system with an Open API-based platform, that allows them to drive revenue, attract more customers and stay competitive.

In maturing markets, where innovative approaches are imperative, banks are adopting novel approaches to tackle different types of challenges. Free of legacy processes and cultures, some banks in emerging markets are using their agility as a springboard to success, taking advantage of technology to integrate new features without replacing entire systems and platforms.

Africa’s vast non-urban territories are a barrier for banks looking to reach financially excluded regions. Agency banking is a solution that can overcome the distance quickly, and deliver services swiftly. In countries like Nigeria and Kenya Financial organizations are solving it with fresher strategies, by using technology agents can sell a greater variety of specialised products and services on behalf of the bank to customers in outlying regions.

Adopting an open API strategy capacitates banks to become technology leaders with a marketplace business model, monetising access to their platform and trading opportunities. Following the model set by the platform-based technology leaders, the GAFAs [1], banks will also open access to rich data, driven by all transactions processed on the platform, whether it is a service offered by the bank itself or by third-parties via its marketplace.

Open APIs don’t have to be beneficial to banks only. Retailers (think any B2C company, including e-commerce traders), distributors (the likes of Coca-Cola or any FMCG company) and even governments could also create an open platform by adding digital means of payment to their current infrastructure to connect payments, logistics and communication in one platform. This way, payments, logistics and communication would all be digital and manageable from one platform, which could be extended with third-party services without the need for long nor expensive technical development.

Open platforms (powered by Open APIs) is where business strategy is heading, allowing banks, businesses and institutions to create a connected digital ecosystem that can adapt to the market’s evolution through quick, easy and cost-effective integrations with any external party.

[1] The tech giants (Google, Apple, Facebook, Amazon)