Driving Banking Innovation in the Age of Assistance - The role of APIs

hello everyone and welcome to a PG online Meetup my name is Kiki and I'll be your host today we are broadcasting live from Google London headquarters and we are all very excited to have you joining us today back by popular demand today marks the eighth a PT online meetup edition and our goal is to be as interactive and educational as possible so in today's session we are joined by Oliver org and Paul Rohan and we will talk about driving banking innovation in the age of assistance so first only talking about FAI Fi as disruption we're gonna have Paul Rohan talking about the role of api's in banking and then we're gonna go to a fireside chat as always we will provide you with plenty of opportunities for participate participating and asking questions so before we start few reminders please ask questions throughout the session we will have a dedicated time to answer to all the questions so feel free to submit them at any time and also to ask questions use the link here or click on the ask question button on your watch page now I would like to welcome to the stage our special guests Paul Rohan Paul is an author of two books on open banking and has a vast experience working with c-suite on the area around the world and also Oliver OGG so without further ado grab a drink make yourself comfortable and let's get start it over to Andy nice Kiki so over the last couple of weeks I've just been keeping an eye on those that have registered for this online Meetup so welcome but I see we've got a lot from the world of financial services but we do also have quite a few who don't directly at least today work in the world of financial services so I thought it'd be a good opportunity just to take a holistic view of course what we see in the world of EV is disruption and and see some key themes that I think are relevant to all so first of all the concept of being open so the fintechs the digital natives are by default you know as part of their DNA open they expose their core data their core services via api's so that it is extremely easy for others to work with them that's quite different from the incumbents so ask today in during this meetup you know what is right for the business that you work in and what's the appetite today it could be a significant shift second leveraging data if you work for an incumbent you are no doubt sitting on an extraordinary wealth of data that I'm sure is not being fully leveraged often there are significant challenges around data being in silos so at least internally you know expose this valuable dataset within the business so that other parts of the business can consume it easily but also think about these new data products that you could surface up as api's to external participants these can be incredibly valuable think about the insights that you can drive from your scale and the data on which you sit on third a gravitational pull so why would others want to work with you now it could be that it's incredibly easy to work with you it could be your scale perhaps the number of customers or the number of products and services that you offer today perhaps it's the unique insight that you've managed to drive out of your out of your data I it could well be a combination of of a number of these so think about what is the unique value that you can offer to attract others your traditional ego isn't certainly not going to be enough going forwards fourth cross industry ecosystem so we see this for two main reasons the first being about maintaining relevance so for many businesses today in order to maintain a continual relevance to their customers they are looking to bring additional products and services from other industries to the channels that they own that they can drive down to their existing customer base so that as a customer I'm more continually engaging with that particular brand secondly we see it when in the industry is seeing some level of disruption and the more severe the disruption the more cross industry collaboration we we observe and this is a defensive and offensive play in a competitive landscape so take a take a step back and consider your organization's own competitive landscape and again the appetite of this cross industry ecosystem play and last but not least least the ability to execute so there are lots of challenges in doing this well there will be organizational mindset issues there will be leadership issues there will be organizational structures personal egos in the way so this is not a half way this is not an easy thing to immediately solve and of course talent is hard to attract and maintain so these are five very common themes that we see in the world of financial services but certainly in other industries and hopefully will be useful to have in the back of your mind as we explore this topic in more depth thanks very much over to you Paul thank you Thank You Holly and good morning everyone and I'm going to talk about the role of api's in banking and while some of my comments a lot of my comments will be specific to banking they can probably apply to any really traditional mature business that's been around a long time that wasn't born on the internet and is now seeing both the threats and opportunities from digital ecosystems so I hope to cover four teams today four topics and I'm going to call them up now to give you a chance to consider them at a very high level and maybe perhaps contribute any questions that you have to our discussion and we've a fantastic vantage point at Google Apogee in that not only do we serve a lot of banks and financial services companies globally but we work across every vertical and we think that something much bigger happening than just banking or open banking which we would call the age of assistance which I'll come on and describe in a bit more detail but we think to be relevant and responsive and fast in the age of a systems you know API products aren't just an optional extra excuse me we think they're absolutely essential secondly the world of digital ecosystems are radically different in terms of how people think and behave in terms of growing their business and managing their business strategy and technology and managing their brands and there's also discussion around mindset and corporate culture but to be really explicit here we're saying we think work is required on both computer systems and belief systems sounds bit odd but come on to discuss that in a bit more detail and we think it's insufficient just to do work on your computer systems and not work on your belief systems we think this will prevent you scaling or certainly getting the full benefits of digital ecosystems then I think brand is very important brand strategy okay for a couple of reasons for several reasons in fact firstly brand strategy has a much longer duration than business strategy or technology strategy so your technology strategy or your business strategy might have one or two years to run whereas brand strategy is very long term five to ten year thinking what type of emotional reaction and response do we want to get from the marketplace far broader than just our specific products and services and often people who are from a pure technology background say to me you know banks are in terrible trouble are the banking industry is in terrible trouble their user interfaces through user experiences aren't good you know they must be out of business in a few years my response is well you know we need to reflect on that because the banking industry based on which historian you believe - four thousand years old so it has thrived and survived many evolutions and technology so we have a view from much observation that maybe the the brand purpose of financial brands won't be changed hugely by digital ecosystems and however brand audiences will be changed in a very radical way and then lastly what will be a great financial brand experience in the era of digital ecosystems and in the age of assistance and we think that the the financial brands that treat developers as customers and approach them entirely as they would approach customers are the most likely to scale and succeed in this world so firstly what we mean by the age of assistance and in the context of that we think it's very much a hyper-connected world and we would define this as that it's impacting all services not just financial services and that customers are now expecting their favored brands to work together to provide connected experiences in digital ecosystems and if that sounds a bit far away or theoretical for a traditional financial services company you need to consider many aspects of this but focus in on customer journeys so how does your company define customer journeys is it a long time since you've reflected on what they mean do you mean customer journeys by they knock on the door of your store or your branch or they knock on the door of your proprietary digital app and then customer journey management is ushering them to the right solution the right product to consider the suitable service that you have for that stage of their lifecycle the big concern for companies that are adopting that mindset is that there's a new generation of buyers whether they are young consumers are young businesses who expect who are on a journey to a digital ecosystem and they expect their favored brands and favored providers to collaborate and provide a connected end-to-end experience so in reality they're on a journey to the ecosystem and if you wish to serve them and remain relevant on one of their favourite brands you need to push your service is out there into that environment and let them use those services through whichever interface is suitable and appropriate and contextual so in that context rethinking what you mean by a customer journey and focusing in on the young generation and how they see customer journeys causes a major rethink of not just your brand strategy but also your business strategy your business architecture your technical strategy and if all of these things are going to work your mindset and this mindset needs to be shared right across the organization across all key roles from the top to the bottom we talk to many banks about digital transformation and often their focus can be quite narrow and they believe that transformation involves using new technologies and doing new things and doing things in new ways and often we have to remind them that transformation is a combination of two things it's both starting the new ways doing new things doing it with new technologies but also effectively stopping the old ways stopping using the old technologies stop using the old methods and it's useful to consider the age of assistance from from this perspective so we would argue very strongly that in the age of assistance only API enable collaboration is going to help you keep up and it's going to be relevant so look at some of the ways in which a traditional financial services company or indeed any traditional organization my partner and they would have historically focused on things like joint ventures or strategic alliances and a joint venture is incredibly precise in that a separate organization is set up to do it but it's played with problems it's very slow to get together you can have a clash of cultures inside the new organization from people from two different organizations it takes incredible mental pre-planning and if it doesn't work out it's very hard to exit strategic alliances aren't quite as rigid but they're very very loose and they're slow to get to Markus you're assembling projects and bites up side both organizations and it's tough enough to assemble a project inside one organization but to collaborate across two organizations using projects is incredibly difficult so very hard to coordinate and ambiguous about who's doing what and the crucial flaw that both of them share apart from being slow are rigid or loose is that it's not reusable it's specific to that collaboration whereas API enable partnering the investment is reusable so you try out an API but one partner turns out to be a good API but the wrong partner moves swiftly on to the next one it's faster market there's automated processes behind the api's which everyone can trust there's automated fast onboarding companies that go partnering use the api's move from onboarding of partners that last months into onboarding of partners that last hours and there's no barriers to exit the investment is reusable you can move on to other partnerships and other ideas and other collaborations incredibly quickly and within this world you can come across unanticipated opportunities with your api's that no one in your organization could have imagined before you publish those api's so with a strong view about the age of assistance we think it straddles all verticals not just banking so we sell API management software you buy our software the problem is sorted that's not the case we think there's a lot more to be done then changing computer systems to handle api's if you wish to be successful in this world as a financial brand so onto belief systems and we like to think that we are incredibly clinical in our business environment that we make every cold-blooded analytical economic decisions and that is the case but those decisions are built upon a base of assumptions and beliefs about how the marketplace works how to grow in the marketplace how to present services to the marketplace how to segment the marketplace the crucial thing about belief systems is that they are systems that people believe all elements of the system not just one it's not a pick-and-mix where they can where they can select so in that context we think the world the age of assistance and the digital eco systems that are serving in the age of assistance does require quite a radically different belief system a set of beliefs that are not only relevant and effective in isolation but all connect to each other and that these beliefs drive a common set of behaviors and assumptions right across the organization which means you can scale cohesively whatever technology strategy pursuing or whatever business strategy you're pursuing so for phone it's just harkens back to those old TV ads for soap powder do you prefer brand day or or brown b-but let's consider financial brawn day and financial brown be that our look in the world of ecosystems and that's hypothesize that brand a has bought themselves a brand spanking new computer system and API management platform for ecosystems but there hasn't been a general discussion and revision of the belief system why are we doing this how's the market going to operate how should we present ourselves and then brown B which is not only working on computer systems but is having a long and deep and broad discussion from the top to the bottom of the organization about what they should believe about ecosystems on how this is going to guide their decision-making so I simplified but we think effective summary of to belief systems you can tell we have the one we like in green and the moment we're not so sure about in red but the way to read this slide is is down in sequence so belief systems are assist our systems and all of the individual beliefs connect to each other so does many traditional services organizations which for the last 20 or 30 years if they were asked what do they believe about innovation and business development they would say well it's the job of our staff and because it's difficult and slow we're doing everything ourselves we tend to focus on large market segments to make it economic and you know if we're a bank we try to have banking products that are better than our peers and we have to control the distribution pretty much up to the line the point-of-sale and because we're doing everything ourselves and we're using projects to collaborate with partners we can handle a small number of partners and to because we believe our logo was our brand and drives recognition of our brand we want our customers to always use our our digital interface and we broadcast loads of marketing messages to try and get them to come to that interface and this is not a common belief system amongst many of the more modern services companies that have grown up whether they're fintechs or other types of new services companies they have an entirely different set of beliefs that all hang together that they want their ecosystem partners to drive the innovation and that they want to be in the a in in ecosystems of collaborating enterprises that can reach very small market segments that they couldn't reach on their own and that their brand experience is driven by how the brand behaves inside an ecosystem and the crucial skill for distribution is orchestrating the behavior of partners and that API is are fantastic because they allow you when you use them as products to manage very large partner population to drive your growth and if we think back to the 1960s and the use of the development of the marketing mix which had four P's initially product place price and promotion these companies believe that the p4 place is the digital interface that happens to be convenient for the customer at that point in time doing what they're doing in their daily lives so in a banking context the p4 place has changed from the digital interface that the bank prefers to decision to face if the company customer happens to prefer this is a profound change which gives rise to significant changes in computer systems and overall belief systems and these organizations that operation in with the belief systems that's orientated towards ecosystems they're not obsessed with our brand as a logo they're obsessed with getting the meaning of what they do and crucially why they do it to communicate it to their end users so that they can form an emotional bond with those clients so that those clients will go looking for those services as they go about their daily lives so radically different belief systems and we believe that the banks that work on just our computer systems and don't consider their belief systems for eco systems will struggle to scale because they'll have a highly incoherent internal environment about how exactly they're trying to grow and in a vase and partner so this is a simple graphic we use an Apogee around the digital value chain and this is the the old digital value chain and brand audience as we see it which is financial brands pushing out their services exclusively by and large through their own brand up and trying to both provide services and form an emotional brand with a brand audience made up of customers we think this is the expanded digital value chain for ecosystems and it expands the brand audience where you're trying to get the same message about what you have but also why you do it that message out to both developers and customers in this environment and that's a crucial thing because the brand specialist will tell you that what you do is is important for your services but what creates long term emotional connections to your clients is that they understand why you do it so you need to get that message of why you do it and why it's valuable for society and the economy and for the customer out there and have developers buy into that too so if you're a financial brand these are the type of brand messages that are broadcast and that company tries to live up to every day which is they're on a long term journey with our clients they want their clients to prosper and sleep easily at night they want to protect them from harm they want to be the financial experts they want to be available where their clients need them they want to introduce relevant other services these are these are parts of the brand purpose of a bank that can go back hundreds of years and they will go forward hundreds of years into the future no matter what technologies evolve well in digital ecosystems the same experience of the brand needs to be experienced by third-party developers who should by using the developer program at the financial brand feel that the financial brand is on a long-term journey with them helping them prosper having them sleep at night you know being the financial experts being an addition good about the use of api's being structured protecting them from harm in terms of how the api's are being available when they're needed and connected to other wider services so same financial purpose in broad terms of financial brand their job is to look after the financial concerns of people in the economy and in society but digital ecosystems radically expands the brand audience so financial brands compete with each other and they need to compete to become the favored brands within the ecosystems both for their customers and for third parties and we would argue that the best approach inside your traditional financial brand is to have the same belief system for customers and developers developers are customers so it's useful to explore the topic in a bit more detail so in that context it's absolutely natural for bankers today to go to work in the morning and without setting out their assumptions or their belief systems every task they do that day is based on this belief that they want as many customers at the entry level of their service offering as possible as many as possible at entry level and they want feedback from the customers good bad and ugly feedback they want it so they can improve they want to pay attention particular attention to the most valuable or strategic customers and the most active ones the most profitable ones the most promising ones this is a natural assumption that underpins decision-making every day they want to assign suitable staff to deal with particular types of customers with the right qualifications and skills and attitudes and temperaments and you want your customers to be prosperous a financial brands wants prosperous customers because that's the key to prosperity and profit for the financial brand you want to onboard customers quickly and easily and you differentiate the services that you offer customers and every day without specifying that this is the underpinning belief bank reset about solving problems for their customers we would argue very strongly in the worlds of digital ecosystems that the exact same philosophy around your brand experience should be applied to third-party developers you want as many as possible at the entry level and we find many bankers and traditional companies getting hung up on this em and we try to say listen you under start it's just like funneling customers you want as many possible customers at the top of the funnel and then you filter them you want as many possible developers at the top of the funnel and then you filter them and that should be the goal of your developer marketing program you want their input it's gonna be tough for some traditional companies when they first began begins our developer program and even if they managed the API is very well they are providing a gateway into into potentially old systems or new abstractions of data from old systems you will get some very very tough feedback but that feedback loop is going to be absolutely essential so we see many banks that are incredibly slow getting mobilized and they're very anxious about the end state of where is this all going to end up in terms of new market structures and our encouragement is this and you have to get started you have to create that feedback loop you can't stay here terrorizing about how this is going to work for another three years you to get started you'll get feedback good bad and ugly the bank that gets started and starts to mobilize and gets the most feedback will refine their offering will get stronger and will form a queue of developers and will start to generate Network effects you want to filter your developers get the most influential and profitable ones and in terms of that filtration monetization is a tactic we see many banks getting hung up on the idea of API monetization I want to be pay for all my api's I want to know who's going to use them how much they're going to use them with what volume this is not effective consider how banks consider bank fees for certain segments of the market like startups businesses or student university students they they don't charge fees because are they charge lower fees because these are strategically valuable market segments in the long term all their banking customers get discounts for using a lot of banking services because they're using them at volume so they get a volume discounts other fees are decided and charged based on the nature of usage the volume of usage the future potential of usage and in many cases is highly valuable banking clients that do a lot of borrowing or gelada depositing don't pay any fees the exact same principles apply to API monetization it's a tactic if there is a developer that's driving a huge amount of business traffic that allows lots of deposits to be taken in or lots of new lending to be done then you can be quite relaxed about how much you charge for the use of the api's you're getting lots of valuable referrals you don't need to charge that developer for API usage so it's just a tactic M and you learn as you go and you'll refine your pricing tactics around api's crucially you want to Vella price to be prosperous just like you want your customers to be prosperous and this is something to focus in on because we see some banks getting very hesitant in case third-party developers combine their banking api's into third-party services and have a big success and bankers feel that in some way we've lost out on a big opportunity even though we would never have had that idea ourselves or we would never have collaborations with our partner or ourselves and they need to get over this because there's no better developer marketing then having one of your developers have a big success with your api's you want a big queue of developers to follow you want as many developers as possible at the entry level you to unboard and quickly and easily just like customers and just like banks try to differentiate their banking services you need to differentiate your api's make them faster make them more data rich make the documentation better make the people who manage your api program more progressive more knowledgeable make them more better relationship managers and in this evolution because banking is thousands of years old bankers will come to the office and the only difference will be is that they want to solve problems of both their customers and third-party developers with the same energy and the same purpose and because they'll be part of their brand audience and they will serve their brand purpose and will drive new growth and new innovation and partnering for banks and financial services companies in digital ecosystems so they're there strong conclusions that Apogee has derived from its it's a fantastic vantage point to the marketplace across all verticals and there they are again delighted to deal in our fireside chat if people have questions or ideas related to these ok all right so now let's pause and get some questions from the audience and once more to ask question please use the link here or click on the ask question button on your watch page so the first question here some people say ecosystems will turn banks into dumb pipes what do you think about that pool a key key key we get this question a lot ok and sometimes we have to turn on pickers of what do you mean by dumb pipes but in many ways we see it as a cultural reaction to new customer journeys which other companies are generating and a feeling that if you're not in full control of the entire journey yourself with your logo on the front that something major has been lost and all we can do is step back from that and ask well forget about pipes what might be dumb going forward ok and coming back to the age of assistance where young people are increasingly used to these connected journeys with their favorite brands collaborating and providing a seamless experience where they might end up buying several things from several companies but it's been one connected experience you have to ask yourself is it dumb to broadcast messages to those young people those young businesses that are you becoming increasingly amassed in this world saying common look at our proprietary up common lock break the chain break your concentration break the convenience and calm and read up on what we have and you probably find it marginally better as a core product than something you just bought too late ok so in the context of that we would say step back because it's a very emotional statement and ask what in this there's an environmental change coming what financial services are still very valuable and rare it's very hard to get a license particularly to take deposits highly regulated you need a lot of capital this is not a business that many organizations will get into easily so in that context we are Spanx to separate the core purpose of what they do as bankers and how all services are changing and once they step back from that we find the question of dumb pipe down pipe will be a dumb pipe is far less sinister and then they start to see the upside which is if I'm not fully in control of the customer journey yes perhaps my logo is not on every screen but if I use API products I can be in ten times as many customer journeys and I can have a realistic aspiration to double my sales okay and while I'm in ten times as many customer journeys and if you're if double your sales that's gonna pay for a lot of marketing budget to help get across your brand message okay so we ask people to step through but it is a question and it does reflect this belief system that we think is very established but increasingly might be the wrong belief system to have about how bankers should distribute their services great thank you so much thanks so much from that thanks for the questions we're gonna start the fireside chat now and I just would like to remind you that we will keep asking answering questions during the far side chat so please keep them going coming over to you early great thanks Kiki Paul fantastic session you've got this unique global perspective often traveling around the world and when you look across the entire landscape I mean who's kind of leading the way yep we see a lot of leaders and laggards and but it's it's difficult to define an absolute leader based on geography okay and because there's different environmental factors so there's developing economies for example where there's never been home broadband there has never been home tops there's a whole new generation of people getting connect to the internet for the first time and that there it's all mobile it's all cellular and to give context 10 years ago one third of the world's global middle classes who are heavy users of banking services from financial brands was in Asia in ten more years it's on a twenty-year shift two-thirds of the global middle classes will be in Asia and those new consumers of banking services will never have had home broadband will never had on laptop it will all be mobile it'll all be cellular and in that context there's banks in Asia who are only building api's and not building apps because they don't think apps are gonna scale gonna be hundreds of millions of people who are new customers with different languages they'll be part of the platform economy they might be managing their daily lives to a Chinese platform or to an American platform or another in Indian platform they need to expose banking api's so they're very advanced with api's but they're driven by their environment where we see in regions where we see leaders that are more progressive as institutions we think it comes down to executive leadership okay because things like talking about a new belief system and a new brand strategy for ecosystem that's a c-suite job okay and when you're trying to do new use new techniques like api's in new market segments with new partners you know people get a lot more nervous about things going wrong then there are tried and tested methods that they've used every day for four years and everyone knows what to expect and most risk management techniques have been worked out so a lot less nervous so and you know when there's a setback in a very mature environment people get over it faster and move on whereas setback in this brand new world where people are uncertain to feel like the sky is falling in okay so as people are making the transition we think into this new mindset and a new belief system not only do the c-suite need to fire the starting gun but they need to stay engaged okay because they're learning people are learning and you need to cease we to constantly keep that strategic goal in mind it's a setback it's a mistake let's fix it move on move on move on we're entering into a new unfamiliar strange markers it's like landing in a foreign country we don't know the people we don't know the best segments we don't know the best products to sell we got to get around the place and figure out how it works and then we'll set very tough targets ourselves and then we'll scale so we deal with a lot of organizations and the ones that are least tentative and most progressive and get over the learning experiences faster are the ones where the c-suite called out the called out the culture changes as well as the technology changes and then don't just treat it as another project come back to us in six months when you're finished because the odds of being success in a very established environment is radically reduced if they don't stay engaged so leadership comes from leadership right and how much permission does a bank have to get firm that say their regulator is that almost an excuse to to execute because there must be some regions where I guess the regulate the local regulator has yet to say you must do this yeah the regulator environments do differ and but bankers can get frustrated very frustrated sometimes with what the regulators specify and some of that's justified and some of it's not but you have to ask yourselves why are regulations during this or even considering this okay because they issued licenses to people to run banks that will finance the growth of the economy okay so regulators are looking at how the economy is evolving and it's the age of assistance companies are connecting to each other consumer experiences that are highly digital and highly connected and regulars are setting a policy framework around consent and privacy and all of those conduct rules but they're there to underpin good practice in a world that's getting connected okay so we encourage our clients to step okay yes article 58 might be ambiguous I'm frustrating and if only the regulator's around the world would get together and synchronize everything put that aside and ask yourselves what why are they doing this why are they doing this and not only is it the age of assistants and banks if they want to stay connected to their customers need to connect but regulators with whatever degree of effectiveness are setting up setting themselves up to regulate conduct in the age of assistance so step up to the why and we think that some banks that get obsessed about regulatory micro decisions are at risk of missing the big picture because then they send a team over in the corner to deal with the regulations and what they should be doing is getting the whole organization to consider how do we develop and persist what our brand in this new way of services being designed and delivered and consumed okay so I I guess I see a common kind of dichotomy of execution between those that just see it open banking as a regulatory tax so those that are desperately trying to engage with fintechs perhaps desperate try to spin up a viable ventures within a large larger groups and there's a lot of so if we shift the conversation from regulatory to the innovation spectrum there's a lot of innovation theater going on in the industry I mean what are the some of the some of the kind of common pitfalls that you see and I think most of them are cultural in that we've an in it I think it's it's a step forward and a step back to create an innovation department in the corner where everyone takes their ties off and you have bean bags a set of desks okay it's a step forward and that we need to loosen up and think about doing things in new ways and with new partners and in new segments but at the same time too with the wrong leadership are insufficient leadership it becomes well that's their that's their job and incremental minor changes is business as usual so in the context of that and there's a socialization challenge right across the organization and I feel for some traditional banks i ice sometimes perform we say we think they're making progress because we see the suits okay with the ties on but she talking in detail about the culture of the ecosystem and how do I grow and yes I need to do the governance yes in truth the risk management but how much is enough how much is too much and so therefore you have to ask yourself what does the ecosystem want from banks they want stuff that non banks can't do the stuff they want stuff that you can't do without a license all of that stuff that is regulated because badly managed banks blow up economies throat therefore they get regulated so once you start to say well what what do we have that's valuable and rare as a bank that's hard for non banks to imitate or substitute that's the core it's payments at high scale it's loans at high scale its deposits at high scale its investments at high scale and that's the old systems you need to get the data abstract out of those systems turn into api's start to learn the feedback from the developers so there is no shortcut and the risk is that innovation theater which can be superficial delays the real innovation which is what do we do that no one else can do because the ecosystem monster and this kind of ties into my next question and and something you just referred to earlier round failure and learning yeah when you're working with c-suite do you do you talk about that and perhaps a bit more detail too because I think that I see others sort of pronounce it as if you know this is a this is okay to do but actually I think when when it came to it failure would not be accepted and heads will be removed I I think you should I think you have to connect failure to projects culture ok so why does the traditional organization fear fader so much because projects are terrible okay they are really the compared to business as usual they're incredibly difficult to execute there are temporary and unique management structures full of people who are reporting to different people on temporary assignment most of them don't reach their goals and inevitably the vast amount of work they do is not reusable so when you're trying to innovate and partner particularly to projects failure is a horrible prospect a it's likely and be it's really expensive ok so I don't you can just say failure in isolation I think fear of fader from feeding that there's no alternative to projects okay and they're an expensive way to fail because for all of those reasons we just said so in that context when you're trying to say there's an API products if you systematically start to build them and use them and market them and get feedback on them your faders are far more economic its are far faster okay the stuff you did to reach the fader far faster is reusable a lot of its reusable and you're actively marketing the outcome from your in it your innovation to not just the first person to use it but to the next hundred who could use it so I think if you if you when people say listen where evidence rate of failure here is no it's people are afraid of failure because they think there's no scalable valuable alternatives to projects culture there is API products culture okay and I think once that feeling starts to once that understanding starts to come and then crucially support it from the top then the idea of partnering is API enabled it's reusable investment I can exit quickly if the partner turns out to disappoint they don't produce the volume it's reusable there's automation behind it I've a marketing program it's as much it's an entire new belief system around how you're going to collaborate then projects and it's awful I hate it how do I get off this thing yeah great and I had a moment of realization actually this year when I was in a form of maybe 18 C suite of Mir insurers mainly CEOs and we were the topic was ecosystems but I very rapidly realized that she that some quite a few had come to that session with a mindset that an ecosystem included kind of strategic alliances so I had to really kind of bring that room along into the set of saying well actually you know that this is our perspective it's something that you see in the world of banking as well cuz you know I guess banks have been at the core of an ecosystem of yeah yeah I think you've the Medicis here you know very vibrant ecosystems for hundreds of years yeah sorry I'm not saying that that strategic alliances will never be used but if you want to have a thousand partners in an ecosystem driving your growth you won't do it strategic alliances it has to be API enabled partnering and I do think there's a key part of the cultural shift so you have to say to people sometimes this and you're talking to fintechs at the moment or you looking potential partners and you you imagine who it might be and you organize our lunch you talk about how you might collaborate um and then you assemble projects in your respective organization you know even this description of it it is slow okay and but consider what you define by a partnering opportunity should it be when somebody who you've never met has started consuming your api's and not just consuming it doing it in ways that you would never have thought about is bringing your services into new segments that you never reached on your own they're paying for the privilege now it's the time to have a lunch and say should this be a strategic alliance so coming back to the idea of treating developers as customers you want as many possible partners at the entry level and then begin the filtration process through API monetization and then so if you think about fintechs and banks were talking to a lot of fintechs and there's been a lot of launches and lots of bears and lots of coffees the question should be now can you use api is to filter those fintechs that want to talk to your bank into those that can just talk and those who can talk and actually simultaneously drive traffic into your organization through your api's and papers okay and I see there's a question that's coming through that's somewhat related to the theme of ecosystem so let's ask this one does Google or I'll just rephrase it slightly does has Google created a marketplace for financial services or will you do it's a very big Eiling title a marketplace for financial services and financial services is an incredibly broad church in terms of what it offers from the most sophisticated investment clients down to the simplest startup or junior savings account and Google is a global organization so in the context of has Google craze or marketplace for financial services it's hard to describe what that might be okay there's no doubt that if you step back and ecosystems as as a place where there are connected experiences across their favorite brands Google is a very popular brand people connect through Google pay through banks connect to Google Maps they connect to all sorts of Google digital assets that type of you know are you going to create something monolithic where you can see it's a connected economy in the age of assistance Google has vast numbers of api's vast numbers of collaborating partners step back from thinking that there's going to be huge moves by horizontal organizations or vertical organizations people should consider what will be the design of the overall marketplace for all systems and for all services so you're gonna find insurance companies are going to be dabbling in segments that they would never have touched when they had their old business model but now we'll make some money out of stuff that's very partially related to insurance banks will start to make money out of non banking activities and ecosystems so we we often we think that developing strategy based on the positioning of other companies is increasingly impossible so ten years ago you could do a strategy session and everyone does the SWOT analysis on the wall strengths weaknesses opportunities and threats and when fintechs came along bankers would rice collaboration with a hundred FinTech names down as an opportunity and then they'd paused the same contract FinTech names down as a threat okay and all that said was you can't devise a strategy that everyone in the company understands and is pursuing based on what are those 47 rivals and potential rivals doing now okay if there's a big shift to the design of the markets and how it operates you have to shift your positioning towards that design so analysts have described strategy of it's a plan and it's a position and it's a pattern of activity and all different ways to look at us and we think the pattern of activity is changing radically follow the pattern of activity in terms of how you behave trying to figure out what 100 other companies are gonna do might be an interesting discussion to have over coffee however it doesn't produce anything sensible for your organization to figure out terms of its priorities for the age of assistants great so let's say tomorrow you go go home and on the on the on your on your doorstep is a letter from a bank with a very attractive offer and you become you want to become the CIO okay you've had enough of the Google Cael around them inflatable dinosaurs whatever and and you're more green flowers no more green chinos now you're looking at this future and tat technology landscape of AI AM L API and blockchain what's the right level of focus a CIA should have on this feature landscape yeah that's a api's I I think it was a Thomas Edison said that you know genius is 1% inspiration 99% is perspiration so for a traditional bank in the CIO getting the valuable services out of the core legacy systems and in turn ups into an API layer that's gonna be a lot of perspiration okay and there's no shortcuts and but as that's happening the 1% of the time this the most valuable is is evangelizing for the change in market dynamics and in some of those topics we've just discovered looking for inspiration in what's happening in other service industries in terms of how they're using api's in ecosystems and focusing on developers is a new brand audience to make sure that they come to at the same respect and affinity to your bank as your customers but arguably say very strongly to banker colleagues really the purpose of a bank hasn't changed how services are designed and developed and delivered are changing across all service industries but financial services remains quite a small regulated highly capitalized tough business it's not going to not every business is going to get into it we just need to rethink the service is part of financial services the financial bit might not change that much we have lots of prosper to get the financial services out of the old systems into api's and but then more broadly I see it as a huge opportunity okay there's gonna be 10 times as many customer journeys we can be in if we've API products that can connect okay so I don't think being CIO of a traditional bank with all systems is an easy job it can be made easier if all of these belief system issues are surfaced and discussed at the top of the organization and then once any organization once everyone starts adopting the same mindset and going in the same direction any organization can produce phenomenal outcomes great we're coming close to the end of the time for the fireside chat well obviously have audience questions the questions in a moment and you mentioned the constrained issuing of licenses but I guess they're they're probably banks have been maybe complacence the long word but there's been as the safety net of yeah of that but obviously that has changed to a degree where there's been more that's been issued and it kind of ties into a question really around trust as well so there's a safety net of this very valuable concept of trust yeah how much can banks rely on the existing license world a Red Machine license world and their their perception of trust in the marketplace to protect them from disruption I think they worry too much because many of the new licenses that have been issued are to initiate financial transactions they're not necessarily to settle transaction financial transactions at scale certainly a license to take deposits from the public is still something that regulators don't you know hand out too easily because a public panic and runs on banks is something that can cause a 10-year recession in your economy with a loss of confidence and so yes it's a lot more licenses and with PST 2 and open banking initiatives to allow non banks are more likely regulated fine institutions in ECA payments but much of the profitability industry is driven by the ability to take ments deposits from the public pay 2% on average lend back to the public possibly to tend to be two younger businesses in younger people at six or seven percent because you need to cover the small number who don't pay back their loans and other risks in relation to that process so in the context of that I don't see you know licenses to build a balance sheet being thrown out too easily because these balance sheets the health of these balance sheets are connected to the health of the economy so I do think that banks need to get their heads around what's what is initiation of payments and the abstraction of account data and what actually is providing of core banking services and then recognize that in the in this evolution is opportunities for partnering at scale that they never had before but these part these opportunities will mean nothing if they don't have API products to make those partner partnerships fast flexible reusable and in time the market will get to a new steady state with this new dominant design of how things happen and and my personal view is that banking will thrive and will expand because of the expanded opportunities ecosystems the question is which banks will make the transition effectively and which banks won't fantastic a great summary there as well if I just go into perhaps some kind of takeaways that I've really looked for that fantastic conversation I think you know what I found there really there the position how we position this to be really valuable I I hope through the audience no matter what industry just kind of this a reset of you know the opportunity for the industry and no doubt for your your business they're positioning around the criticality of leadership not only just understanding this but really continually driving it and that developers are customers and should be prosperous I love that idea and then I like to your idea that with digital transformation there's often this focus of new things and new ways but critically stopping the old ways don't don't forget that a very important point thanks very much Paul all right thank you very much that was really interesting now we're gonna take some more questions from the audience and as a reminder please use the link here to ask questions or click on the ask question button on your watch page all right so we have another question here so what can other territories who have yet to do anything around open banking learn from what the EU and UK have done I think I think there are it's actually quite interesting to difference between how the EU has approached us and how the UK is approached it so the UK was has embarked on this initiative which was driven to create more competition retail banking before PhD to came on the horizon and and in some ways our have definitely has an implementation body and has more precise guidance on how services should be designed and for contraries that are thinking about moving into world of open banking the UK provides fantastic templates that mobilizes your banking community quite quickly and where I think the EU is interesting globally is it has a huge regulatory machine because since the 1960's Europe has been creating a single market okay so does perception that this is all new red tape no it's just a centralization of red tape and and there Europe has a man-eater of digital and they're working very very hard to make that happen well I wouldn't look at PST 2 in isolation so PST 2 is looking for API connectivity between banks and third parties it's setting out conduct rules and but this thing's like GDP or setting out expectations around consent yeah there is European work going on around identity privacy and so I think where the rest of the world should look to is whether your regulator is going to be very precise about rules or whether your regulators is going to give guidance around principals what this work that's happening in Europe identifies is the world is going incredibly digital organizations gonna be am connected to each other and regulators will have expectations of good behavior and bad behavior and it's in the interests of the leadership and the board of directors of an organization to go what are these regulators defining as good behavior and bad behavior in terms of conduct by enterprises and whether we have a regulation or not you know we should take that as our cue for to protect our brand in the long term when we write policy documents about being in ecosystems what is our policy around consent when we say to our customers we have partners what we mean by partners okay when we say to our customers we're partnering with somebody how do we make it absolutely plain and simple to them that we're doing this but partners doing that bit we're taking proper care that we're choosing good partners but you just need to read the instructions so I think for bank for organizations that aren't in the regulatory space you have the luxury of not having to obsess over what are they saying in article 58 but go back to the preamble of the documentation when they say why they're doing it these are the type of outcomes that we want in terms of consumer trust and consumer protection okay and that these powerful organizations don't abuse their position so when you read why they're doing it and the expectations they have generally about conduct that's a very useful starting point because one of the things that's holding up organizations getting heavy engaged in ecosystems is going we don't have any policy documents from risk department about how we should conduct ourselves well copy and paste the principles that the regulators are espousing and maybe be glad you don't have to follow detailed rules that regulators have written great okay so thanks so much for the questions I hope we found you found in these useful and interesting we also would love to hear your feedback please send your thoughts via the feedback form that you can see here the link and also stay tuned because we have the next online meetup coming in March 27 so please send your ideas so we can make the next edition even better and with that we are getting to the end of today's session thanks so much for joining have a great Christmas and I see you next time you

Channel: Apigee

Views: 1,718

Keywords: api, apis, apigee, online meetup, data, apigee online meetup, open banking, financial services, api platform

Id: 5ZchBSjwmHo

Length: 60min 45sec (3645 seconds)

Published: Thu Dec 12 2019