{"id":529,"date":"2018-03-22T10:53:43","date_gmt":"2018-03-22T10:53:43","guid":{"rendered":"https:\/\/www.microsoft.com\/en-gb\/industry\/blog\/industry\/2018\/03\/22\/transforming-banking-and-capital-markets\/"},"modified":"2018-11-14T15:23:05","modified_gmt":"2018-11-14T15:23:05","slug":"transforming-banking-and-capital-markets","status":"publish","type":"post","link":"https:\/\/www.microsoft.com\/en-gb\/industry\/blog\/financial-services\/2018\/03\/22\/transforming-banking-and-capital-markets\/","title":{"rendered":"Transforming banking and capital markets"},"content":{"rendered":"

\"Howard<\/a><\/strong><\/p>\n

Howard Bush is a Principal, Banking & Capital Markets Lead in the Azure Cloud Industry Experiences team at Microsoft. As a practitioner of the \u201cart of the possible,\u201d Howard is a 25+ year banker wrapped in IT clothing impacting the Banking & Capital Markets Industry by building bridges to cloud adoption.\u00a0Below, Howard\u00a0provides insights on Open Banking and the global API Ecosystem.<\/strong><\/p>\n

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The Road to Transformation<\/strong><\/p>\n

There has never been a better time to embrace digital transformation and innovation in Banking. Unfortunately, many global banks are being caught off guard by disruptive fintech innovation and swift moving regulatory requirements. On the road to that transformation, banks will have to quickly define the new value chains that will drive market share and growth in revenue.<\/p>\n

As an accelerant to this banking innovation, there are two regulatory requirements coming out of the European Union (EU) where banks have to expose account information and service payments to\/from Third Parties: The Second Payment Services Directive (PSD2) and The United Kingdom (UK) Competition and Markets Authority (CMA) Open Banking initiative.<\/p>\n

In a nutshell, the regulatory directives are requiring banks to open up their backend systems (aka Open Banking or Banking as a Platform) via Application Programming Interfaces (APIs) to FinTechs and other banks. PSD2 and Open Banking are kick-starting the financial services revolution that will connect consumers, third party applications and banks in new ways using new business models.<\/p>\n

Progressive Banks Have a Leg Up<\/strong><\/p>\n

Many banks are only beginning to take action on these regulations despite its massive repercussions it will have on their business. However, progressive organisations that embrace regulation and transform will be the winners. While banks in Europe must open up because of regulation, leading banks around the world are following closely and not waiting for the regulators.\u00a0 They are starting to provide API-based access to services to others.\u00a0 And some banks are pursuing a \u201cmarketplace banking\u201d strategy, seeking to position themselves as a banking platform in the middle, on top of which third parties can build a myriad of discrete services.<\/p>\n

According to ProgrammableWeb.com<\/a>\u2019s global API directory, banks and fintech firms published more than 275 new payment and banking APIs in the past 2 \u00bd years.\u00a0\"Graph<\/a><\/p>\n

Banking APIs or Banking as a Platform offers a gateway to an interesting ecosystem of trusted partners that will improve the customer experience, increase collaboration, speed up time to innovation, measure business impact, predict needs, devise new business models, new value chains and innovative products that customers need.<\/p>\n

With greater accessibility to banking products and services, new market entrants will make it critical for banks to consider new approaches to empower employees, engage customers, optimize operations and transform products to stay competitive.<\/p>\n

The Inflection Point and Microsoft\u2019s Point of View<\/strong><\/p>\n

The key question banks need to think about is How will banks\u2019 participate in a broader API economy? <\/em><\/p>\n

Banks will likely not own the end-to-end value change as they will bring Third Party Providers (TPPs) into their ecosystem. Banking business models will transform to an open ecosystem of partnerships and new un-imagined capabilities. The new era for banking will lead for new opportunities and challenges not seen before. And the role of Banking will be redefined:<\/p>\n