Page 39 - Banking Finance August 2019

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money into savings accounts to high returning investments themselves at the centre of the ecosystem and provide their
by lending to peers to vetted lenders. customer increased value thereby retaining their core
competencies. This is increasingly becoming the case in the
They solve the problem of lending to customers who couldn't US and EU markets where banks are opening up their APIs
avail loans through banks due to cumbersome processes as - Application programming interfaces to startups to let them
well as lack of Credit Ratings. build services that delight their own customers.

Investing, algorithmic wealth management Taking a cue from giants like Google and Facebook who were
By leveraging technology and algorithms to calculate able to position themselves in the centre of the ecosystem
returns, wealth management startups are helping create by letting developers build on top of their APIs, banks can
wealth for millions of Indians who previously didn't place themselves at the forefront of a fintech revolution and
participate in the money market. Looking at China, apps extract value similar to Google and Facebook. As is the case
like WeChat and Alipay have been able to serve 900 million with all major technology companies, opening up their APIs
Chinese consumers in a matter of a decade compared to to foster collaboration results in increased customer
banks that have existed for 50+ years. These startups don't engagement and new revenue models. As can be seen, by
try to physically sell products to their users like banks do Google monetizing their Maps by letting companies like
when customers visit their branches but rather provide their Uber and Zomato use their maps APIs Facebook letting
users with education and an overview of the advantages millions of app integrate its APIs to third party apps fetch
through interfaces that consumers are already used to. the data from their user's Facebook account in order to
Passive investing is increasing at a rapid scale and companies provide a more personalized experience.
like Groww and SmallCase are making it easier for people
to invest through a click of a button through their app. Banking as a platform
"A platform is a plug-and-play business model that allows
Personal Finance management by educating multiple participants (producers and consumers) to connect
consumers to it, interact with each other and create and exchange
value". By leveraging the power of increased distribution and
Personal Finance management apps like Mint and Acorns
in the US and CleoAI in the UK, help promote better financial physical branches around the country, banks are uniquely
positioned to act as custodians and become platforms.
management by providing their users with spending analysis Banks -> Customers -> Ecosystem
as well as advice them on optimizing loan repayments and
investing on high-returns financial products.
Banks already have APIs that integrates with their mobile apps
and allows their customer to avail various services on their apps.
Co-creating the digital ecosystems by By adopting an open API based business model, banks can let
adopting a Platform Business Model third-party developers access the banking records of their
customers securely with the permission of their customers.
By letting third-party developer's build on top of the
infrastructure provided by banks, banks can position Banks can charge a volume-based pricing or offer access to APIs
for free to foster growth. Fintech startups like AuthLayer,
leverages APIs provided by multiple banks and offers a single
SDK to other developers that rely on APIs form multiple banks
much akin to payment gateways but for information, rather
than payments that are sourced from banks.

Banks as custodian of data
With the rise in number of total bank accounts opened under
Pradhan Mantri Jan Dhan Yojana (PMJDY) reaching 333.8
million as on November 28, 2018 and with over 500 million
Internet users in India, both banks, as well as fintech, have
a huge opportunity in serving the customers. By helping
fintechs provide easier access to records such as KYC details

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