25% APAC Banks Will Adopt API Strategy By 2018: Study
25 percent of Asia Pacific banks will have an Application Programming Interfaces (API) strategy by 2018. Traditional financial services companies have to prepare for more customer-focused ways of providing customer experiences- APIs are one of them, according to IDC Financial Insights.
In the long term for banks, the strategy to open their APIs will decide whether they are disintermediated by fintech companies and lose revenue to competition or they collaborate with third party providers and create more avenues of value and revenue creation.
Fresh from the recent conclusion Asian Financial Services Congress 2017 in Singapore, IDC Financial Insights has released its first perspective on API titled IDC Perspective: Moving Toward Open Banking APIs: Opportunities and Threats in Asia/Pacific Banking.
The report highlights the possibilities that API brings in for banks in the long term, and how the strategy to open their APIs will decide whether they are disintermediated by fintech companies and lose revenue to competition or they collaborate with third party providers and create more avenues of value and revenue creation.
“APIs represent fundamental shifts in IT — in how data is provided and used, how functionalities are developed and deployed, and what level of control customers have. This presents a massive shift in how the existing IT architecture can be made ready and customizable to accommodate the changing requirement without losing control over data,” said, Michael Araneta, AVP, IDC Financial Insights Asia/ Pacific.
“Banks’ API strategies require an assessment of internal technical expertise, and identification of the right set of people who understand the impact of this change on future business opportunities and associated threats, including primarily IT security threats. New roles and capabilities need to be carved out within the bank to be future-ready for such a different future,” adds Araneta.
“Open banking APIs will be inevitable as the approach offers so much to the customer, and banks will be compelled to offer these benefits. For the consumer, open banking APIs would mean visibility of bank-related information at one place, accessibility to personalized financial products and services without compromising security, and competitive and lower charges such as reduced charges on card payments and better rates on loan/credit products,” explains, Anuj Agrawal, Senior Research Manager, IDC Financial Insights Asia/Pacific.
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