Page 40 - Banking Finance August 2019

ARTICLE

which banks already has on record, banks can increased
customer delight by becoming an interface for their
customers when they interact with third parties. When a
customer takes a print of their respective bank statements,
banks don't get any revenue from that. Customers risk their
own privacy by letting fintechs scan their GMail inbox for
parsing their PDFs of bank statements.

By letting their customers share their transactions data to
third party developers securely, banks can get a twofold
benefit. Direct Monetization by charging volume-based API
pricing. Indirect Monetization by knowing which of their
customers are leveraging third parties and thereby
segmenting such users in order to better target them with Development around the world
offers and services. By monetizing their APIs bank can The European Union passed an Open Banking regulation in
leverage additional revenue through APIs for some of the 2018 known as Directive on Payment Services (PSD) and the
following use cases.
Open Banking Standard to grant third-party providers access
Y eKYC: Since banks already have KYC records of their to customer accounts, payments, product data and other
customers on file, they can allow their customers to data through APIs. In the United States all major banks have
authenticate themselves with third-party by securely APIs that enable other fintech startups to offer personalized
verifying their bank account. The APIs can provide services such as accounting and financial analysis, trade
Customer details such as Name, Address and Account finance, insurance and access to money market funds.
Opening Date.
Y Accounts: Number of accounts held by the customer One of the early examples of open banking in India is Unified
in that banks. Payment Interface (UPI), an instant interbank payment

Y Cards: The number of cards held by the customers as system developed by National Payments Corporation of
well as their repayment schedule. India. The Government implemented a standard set of APIs
(Aadhaar, eKYC and DigitalLocker, etc.) and even rolled out
Y Transactions: Allow customers to give developers its own payment app-Bharat Interface for Money (BHIM)-
access their transactions data through APIs rather than in late 2016, to enable payments from any bank 24/7 in real-
downloading bank statements. Salary information can time and expedite the move towards a 'presence-less,
automatically be deduced from the API response which
paperless, and cashless service delivery' system. 'India Stack'
reduces time to process documents.
the largest open API in the world, is a project of creating a
Y Loans: The number of loans held by the customer as unified software platform to bring India's population into the
well as their repayment schedules. digital age. Its website describes its mission thus: "India

Y eNACH: Allow customers to sign eMandate for Stack is a set of APIs that allows governments, businesses,
automatic fund disbursal for investments or payments startups and developers to utilize an unique digital
Infrastructure to solve India's hard problems towards
Advantages and new revenue presence-less, paperless, and cashless service delivery".
opportunities: Another instance is SBI-led Bankchain platform, which is a

According to a study conducted by Accenture banks that community of banks for exploring, building and
embrace Open Banking will profit from a potential revenue implementing blockchain solutions including smart
uplift 20 percent, whereas those failing to do so risk losing contracts. Incorporated in February 2017, the platform is
30 percent to disruptive industry players 2020. By partnering operated by Prime Technologies. Apart from 20+ banks in
with fintechs, banks can still retain their core banking the consortium, Bankchain has also partnered with giants
facilities and offer their customers a gamut of new financial like Intel and Microsoft.
products thereby increasing engagement as well as
customer loyalty. In India, all major banks have conducted Hackathons where

40 | 2019 | AUGUST | BANKING FINANCE