This Landscape Report could also be called Bank APIs. I like the name Programmable Bank because it resonates with Programmable Web. It implies a Mashup approach to system development. This is fundamentally different to the huge, multi year core banking enterprise system development of the past.
This is a big enabler for digital only Challenger Banks and for any consumer-facing Fintech ventures.
I have already covered Fidor because their combination of Challenger Bank plus API is revolutionary. This is what could be called Banking As A Service. Fidor is making waves again today with their announcement that Fidor:
“has extended its partnership with German Bitcoin marketplace Bitcoin.de to offer its customers the option to send and receive BTC payments directly from bank account to bank account. The move comes in tandem with Fidor’s expansion into the US, where it will seek to offer similar services in permissible states.”
Fidor is not the only player in this game. Other ventures offering bank services as an API include:
One thread that surprised me is how many of the ventures in this category hail from Germany, including Fidor, Figo and Open Bank Project.
The one that comes from America, BancBox/Finxera, has the mission of embedding banking functionality into non-financial services. Not only do existing Banks have to worry about Challenger Banks and Fintech startups. They also have to worry about their peers in the Global 2000 moving into banking. This is already happening with retailers, telecoms and tech companies moving into banking.
This strategy of targeting developers has been proven to work time and time again. The latest success story is Twilio, soon to have their IPO debut. Twilio is relevant to this story because it is a domain-specific platform (Telecoms in their case).
There are also a number of ventures that offer more specialized APIs, such as:
- Yodlee, for access to multiple accounts for PFM type services.
- Xignite, for access to market data.
- Traxpay (Germany again), for access to B2B payments.
The Programmable Bank trend does not only come from ventures setting out to build a platform for developers. The API is now a standard growth strategy even for consumer-facing ventures. For example Lending Club has an API.
It has been the norm for some time to build digital ventures using Programmable Web mashups. What is new is for Fintech developers, working on more functionally complex systems, to be equally spoiled for choice.
This will accelerate Fintech innovation by further reducing the time and money it takes to build a Minimum Viable Product.
Some of the roots for German “domination” are to be found in the FinTS format imv: http://www.hbci-zka.de/dokumente/spezifikation_deutsch/fintsv3/FinTS_3.0_Security_Alternative_Sicherheitsverfahren_Rel_20130122_final_version.pdf
Traxpay in an ambiguous one.
Thanks Yann, really interesting. For readers who don’t speak German here is a url and then you can let Chrome Translate do its job: http://www.hbci-zka.de/
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[…] of their IT competitive advantage, banks should look at the whole Internet-scale ecosystem of the programmable bank as the ‘IT gift that keeps giving’. The key to seizing that advantage is to put […]
[…] of their IT competitive advantage, Banks should look at the whole Internet-scale ecosystem of the Programmable Bank as the “IT gift that keeps […]