UK banks are moving from being one-stop-shops for financial services to open platforms as consumers start to embrace a more "modular" approach to banking, according to the likes of HSBC, RBS, Nationwide and two high-profile financial technology (fintech) startups.
So instead of doing all of your banking through one or two firms, customers would have their current account with one provider and then bolt on other financial services like an insurance policy, ISA, mortgage and investments through other providers, all under the user interface of your choosing. This approach is called banking as a platform (Baap).
This would only be possible if the banks were to open up their data through application programming interfaces (APIs) though. This would allow fintech companies to make innovative use of bank data to offer a broader range of apps for customers. Much like Citymapper made use of open transport data through APIs to make it easier for people to navigate cities.
Banking as a platform
Kevin Hanley, director of design and services at RBS said: "You see the disaggregation of banking services, the disintermediation of banking services, banking becoming more unbundled, more modular."
"We are moving from an era of physical banking to a connected bank of digital services. This starts to re-frame banking and our role in it as much more of a composite where we both provide services and link to other services. So we become a platform for our customers to navigate around."
Head of innovation and insight at Nationwide Matt Cox also sees this modular approach to banking on the horizon: "We are approaching an inflection point over the next few years where customers will have a great deal more choice over where they do their banking."
Mat Perkins, product director at the Nordic payments fintech startup Klarna was even more direct: "Banking will become a platform. I think the banks that will survive and thrive are the ones that open up their APIs. The ones that don't will become like Nokia."
This is essentially what the digital-only challenger banks have been saying since their inception. The CEO of challenger bank Mondo, Tom Blomfield, wrote in a blog post: "This is why Mondo has a singular focus to build the best current account in the worldrather than selling dozens of different financial products. We can focus on what we know best, whilst offering our customers access to the best products and services from across the market."
Kevin Hanely said RBS wants to position itself as "the bank of APIs". He explained that despite not knowing exactly what opening up its APIs will achieve, he is keen to explore "how opening up our APIs to others can create things we haven't even thought about."
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