APIs : towards a greater customer value
In the digital era, the online client is informed and fickle, putting the banks’ traditional business value chain under pressure. Digital technologies have put an end to the linear business journey and multiplied contact points. Thus, conquering new prospects or capturing new sales opportunities among clients has become more and more complex.
APIs (Application Programming Interfaces) are often presented from a technical perspective. However, they act as a catalyst for developing new business models that offer added value to clients by spreading transparently the bank’s digital brand amongst consumers.
Being visible out of a buying context
By enabling connectivity between platforms, APIs allow the distribution of products and services to a virtually unlimited number of third parties. As such, BBVA uses APIs to access e-shopping websites and provide clients with information on their possibilities to apply for a consumer credit at the time of purchase. By doing so, the bank becomes visible to new consumers when it is the most likely that they will subscribe and in a way that is both transparent and fully integrated to the customer journey.
This situation highlights a coming prominent switching in the banks’ business model: the digital third parties (potentially unlimited) could overcome the banking network (by definition limited) as a primary source to acquire new clients.
Expanding the services offering
APIs participate in a flowing customer experience even if it combines several offers from various stakeholders. It is an opportunity for banks to spread a new intermediation model in exchange for its audience in which they perceive commissions on sales from third parties using APIs.
This model is particularly appreciated by neo-banks like N26 which, thanks to APIs, has integrated to its offering Raisin’s savings offer and TransferWise’s buying of exchange currencies.
Thanks to these APIs, a bank is thus able to outsource parts of its offer to third parties which benefit from its audience within a bank-controlled digital space.
Increasing knowledge of clients
APIs make available data like buying habits, financial needs or risk appetite, which provide key insights to the bank regarding marketing strategy and commercial campaigns. Apple created Wallet, a mobile digital wallet destined to opens up to numerous vendors.
By capitalizing on its banking and e-commerce partners’ APIs, this product allows to pool credit cards, gift cards, travel passes and concert tickets while offering the possibility to initiate transactions via the platform.
This initiative’s business model is based on data sharing to offer personalised services with added value (e.g. adjusting fractioned payment according to the goods bought) by combining data coming from complementary business partners.
Connecting physical and digital experience
The synergy between physical contact points and digital ecosystem allows the expansion of the brand’s visibility within clients’ daily life. U.A. Bank has found a way to involve its APIs into users’ daily life by reinforcing security for payment made at new places. Thus, the bank checks the coherence between the place where the payment takes place and the client’s smartphone’s GPS data when it is activated.
APIs are neither only a technical nor operational subject but represent a powerful marketing leverage that businesses have to appropriate if they want to compete with the new digital barbarians.