Banks must embrace digital disruption


Kele Boakgomo | Managing Director:  Financial Services Practice | Accenture South Africa |  | |

The banking industry continues to experience disruption – by new players, new opportunities and new risks – influenced by a number of forces including Application Programming Interfaces (APIs).

Banks that are not ready for digital disruption will struggle in years to come.

Although some financial institutions such as Citi are using their APIs to open-up their data, processes and other business functionality to an ecosystem of customers, employees, third-party developers and vendors, many however are still entrenched in their traditional operating models. Institutions that are not ready for digital disruption will struggle in the years to come.

Non-banking players such as Google, Apple, Facebook, Amazon and Alibaba (GAFAA) – to mention a few – are unleashing the power of technology by developing platform-based business models which represent over US$ 2,6 trillion in market capitalisation worldwide.

In South Africa, financial services institutions are embracing digital and creating APIs for external collaboration. However, this approach is very slow and measured.

GAFAA and FinTech companies are offering consumers seamless digital experiences by integrating multiple ecosystems. Banks are not immune to new experiences that are blurring the lines between different industry sectors and meeting flexible, changing consumer expectations. Consumers are rejecting banks’ traditional, rigid command-and-control structures.

Open banking

Banks need to embrace digital disruption and becoming an open bank.

Being an open bank means operating like a platform company, with a business model that connects people and processes with assets and a technology infrastructure to manage internal and external users’ interactions.

A successful open bank needs to:

  • Collaborate – holistically from the outset and encourage a cultural shift so that everyone in the C-suite is involved in the conversation about open banking and understands how it can help to achieve the bank’s objectives.
  • Highlight the gains in revenue growth – cost reduction and talent management. Revenue growth can result from generating value from the “outside-in” using APIs to offer services, such as data brokerage and authentication services. Cost reduction can be achieved as open banking helps to reduce time to market and application delivery costs, easing integration with traditional technology providers, such as payments processors, credit bureaus, FinTech companies, data providers, or core banking vendors.
  • Help the process of talent management – leveraging skills in mobile content design and mobile app development to give banks an innovative, tech-savvy and customer-focused image that, in turn, attracts the best talent.

Seeking out differentiation

Banks must spell out the business goals that will drive API creation, consumption or both as they seek out how to offer differentiated services to their customers.

To do so, banks need to design engaging API experiences that appeal to developers through user-friendly developer sites, enhanced self-service capabilities, good API documentation and “sandboxes” for testing and monetising APIs. They also need new operating models for new value delivery.

New operating models are needed to take into account organisational structures that blend together product development and IT operations to enable open banking. An effective IT architecture should include a developer portal to manage the relationship between the bank and its API users, a business administration portal, and an API getaway for reducing API-related risk – enforcing identity and access management and security.

Mind-set and culture are vital to driving customer benefits from open banking. Strong C-suite support backed by a sound mix of different layers of knowledge and expertise will be critical. Finally, to manage partner ecosystems effectively banks needs fast decisions based on a large amount of data from API users. Artificial intelligence tools can help to reshape and adapt the process as it executes in runtime.

Digital disruption is the driver that enables banks to keep pace with customer demands. By adopting the right digital business model, banks can take advantage of open banking to unleash new business value.



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