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8/19/20208/19/2020
1Treasury Management Solutions
Treasury Management Solutions
What your
Banker Should
Know about APIs
September 2020BBVA and BBVA Compass are trade names of BBVA USA, a member of the BBVA Group. BBVA USA, Member FDIC. All accounts are subject to approval. All trademarks, service marks
and trade names referenced in this material are the property of their respective owners.
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The content provided is for informational purposes only.
Neither BBVA, nor any of its affiliates, is providing legal, tax,
or investment advice. You should consult your legal, tax, or
financial advisor about your personal situation. Opinions
expressed are those of the author(s) and do not necessarily
represent the opinions of BBVA or any of its affiliates. All
accounts and credit are subject to approval, including credit
approval. BBVA and BBVA Compass are trade names of
BBVA USA, a member of the BBVA Group. BBVA USA is a
Member FDIC. All trademarks, service marks and trade
names referenced in this material are the property of their
respective owners.
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What is an API?
Confused
Lets clarify some things!
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What is an API?
An application program interface (API) is code that allows two software programs to
communicate with each other. An API defines the correct way for a developer to
request services from an operating system (OS) or other application and expose data
within different contexts and across multiple channels.
https://searchapparchitecture.techtarget.com/definition/application-program-interface-API
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Types of APIs
Source: IBM Corporation
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What is an Open API?
An open API is nothing but an API that has been made public, so that third-party applications can access back-office services/applications without any middle tier. It is a way of simplifying the integration between the external applications and the core functionalities of a business. APIs have been around for a long time, but were never before made public and accessible to the outside world. Therefore, this is a complete shift from the old concepts and creating a new world of open APIs.
https://www.techopedia.com/2/31968/technology-trends/open-source/open-api-the-future-of-application-programming-interfaces
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Examples of Open APIs
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Examples of Open APIs
The Google Maps API allow for
the embedding of Google Maps
onto web pages of outside
developers, using a simple
JavaScript interface or a Flash
interface. It is designed to work
on both mobile devices as well
as traditional desktop browser
applications. The API includes
language localization for over
50 languages, region
localization and geocoding, and
has mechanisms for enterprise
developers who want to utilize
the Google Maps API within an
intranet. The API HTTP
services can be accessed over
a secure (HTTPS) connection
by Google Maps API Premier
customers.
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Examples of Open APIs
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Examples of Open APIs
Affiliate partners are
companies or individuals
who have access to our
Consumer API. They use it
to connect their products to
OpenTable's restaurant
content and to give users
the ability to discover and
book tables through those
products.
Once the API is plugged into
your app, widget, or site,
and you're logging more
than 100 seated
reservations every month,
you'll make money with
each converted booking.
The more traffic you have
and send to OpenTable, the
more revenue you’ll
generate.
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https://en.wikipedia.org/wiki/Open_API
Examples of Open APIs
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Why Should Your Banker Be Concerned?
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Why Should Your Banker Be Concerned?
= OPEN BANKING
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What is Open Banking?
Open banking is a system that provides a user with a network of financial institutions’ data through the use
of application programming interfaces (APIs). The Open Banking Standard defines how financial data should be
created, shared, and accessed. By relying on networks instead of centralization, open banking helps financial
services customers to securely share their financial data with other financial institutions. Benefits include more
easily transferring funds and comparing product offerings to create a banking experience that best meets each
user’s needs in the most cost effective way. Open banking is also known as "open bank data."
https://www.investopedia.com/terms/o/open-banking.asp
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Open banking is a term that is associated with a broad set of initiatives that align to one of these three principles:
Banking customers are empowered as the owners of their financial data.
Customer data has been traditionally locked in banks’ IT systems, but this practice is changing. Regulations,
such as Payment Services Directive (PSD2), are forcing banks to “open up,” enabling customers to easily share
data with third parties.
Banking products are transparent and easy to compare.
You can understand and compare products only if they are described in a consistent way and the information is
easy to access. The first phase of the UK Open Banking initiative is an example of initiatives that are targeting
this space.
Multiple parties work together to create new value chains to produce better products and services.
A traditional retail bank has its own distribution channels (such as branches, contact centers, and digital
channels). It also creates its own products and has its own back-office operations. The emergence of financial
technology (fintech) and the push of regulators for more competition are disaggregating and open this closed
value chain. In a world of open banking, participants can specialize in one or more sub-steps of the end-to-end
process. They can focus on areas that have a clear competitive advantage and leverage the scale and efficiency
that partnerships with other players enable.
https://www.ibm.com/blogs/insights-on-business/banking/open-banking-apis-are-open-for-business/
What is Open Banking?
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Open Banking – The Early Days
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celent.com
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Examples of Open Banking
Versus
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Examples of Open Banking
Working
With
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Open Banking Is Coming
“According to the World Retail Banking Report 2017, published by Capgemini in
conjunction with Efma, fintech firms are more likely than traditional banks to provide
consumers with positive banking experiences. That said, more collaboration than ever is
taking place between banks and fintech firms, leveraging the benefits that each can bring
to the table to create customer-centric solutions. This collaboration has lead to the
emergence of Open Banking and APIs, using customer data and innovations to create
new revenue streams and more contextual services.”
“According to the World Retail Banking Report (WRBR), while a small minority (2.9%) of
consumers do all of their banking with non-traditional firms, more than a quarter (26.5%)
use both traditional banks and non-traditional firms. More than one-half (52.4%) maintain
relationships with three or more non-traditional firms, while only 7.4% have a relationship
with just one. In total, 29.4% of consumers globally use at least one non-traditional firm,
with many of these consumers being the most desirable to the traditional banking
community.”https://thefinancialbrand.com/65975/open-banking-api-fintech-partnerships/
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“The most successful banks will use open APIs to generate new customer insights and
revenue streams, while also improving customer experience,” said Vincent Bastid,
Secretary General, Efma. “Many banks currently use APIs internally to improve
information flow between legacy systems. In fact, we are already seeing early adopter
banks asserting their role in Open Banking by proactively making their systems and data
available to third parties and creating new revenue streams.”
https://thefinancialbrand.com/65975/open-banking-api-fintech-partnerships/
“Open banking presents opportunities for creating and distributing a wide variety of both financial and non-financial products and services – with the banking retaining the customer relationship – but greatly expanding the number and variety of services to improve the customer’s quality of life. In an open banking model, an unlimited number of partners could insert themselves into the relationship development process.”
Open Banking Is Coming
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2017
“Corporate customers expect to have access to instant banking facilities, enabling them to interact with the
bank directly from their enterprise resource planning (ERP) or legacy systems in a secure and seamless
manner without any time delay. The digital transformation of the world is creating a paradigm shift in way
that corporates do business. In today’s competitive business environment time is of the essence, which has
compelled banks to minimise turnaround time and ensure instantaneous payments. They are also
compelled to ensure that the facilities provided are benchmarked with global standards and help corporate
customers to digitally transform their businesses”.
https://www.theglobaltreasurer.com/2019/07/17/open-banking-the-great-enabler/
2019
“It’s clear than that the API connectivity layer and AI will be transformational forces within this space and will allow nimble corporates who understand and harness AI technology within the Open Banking ecosystem to emerge as true winners. It’s worth pointing out that this isn’t some kind of future pipedream either – we’re talking short-term here according to many in the sector. In fact, Desai says that real-value for corporate use cases is likely to start emerging in around 12 – 24 months’ time.”
https://www.theglobaltreasurer.com/2017/12/21/2017s-most-popular-api-banking-and-the-digital-transformation-of-business-
part-1/
Open Banking Is Coming
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PSD2 (second Payment Services Directive) is the European Union’s regulation that
mandates banks to open up access to accounts and customer data (e.g. payment details)
to third-parties. Of course, customers that want to use third-party apps to manage their
finance, need to give a permission to get access to their banking data.
The regulation is applicable in the European Union. There are a few players included in
PSD2, such as TPPs (Third Party Providers), PISPs (Payment Initiation Service
Providers), AISPs (Account Information Service Providers) and ASPSPs (Account
Servicing Payment Service Providers) - for instance, a customer’s bank.
All this means that PSD2 allows PISPs and AISPs to access customer account data and
initiate transactions without having the ASPSP prior commercial agreement. In result,
customers may no longer need to log in their banks’ websites or apps directly to conduct
some financial operations.
https://www.quora.com/What-is-PSD2
Open Banking Is Coming
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https://maveric-systems.com/blog/a-new-era-of-banking-customer-centric-open-banking/attachment/open-api
Examples of Open Banking
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Examples of Open Banking
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slideshare.net
Examples of Open Banking
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Examples of Open Banking
Case Study
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Case Study
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Case Study
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Modo tackles a perennial problem with payments: that the natural evolution of decades-
old payments solutions has left us with siloed, unconnected, disjointed, and proprietary
systems. Companies that want to offer their customers innovative new digital payments
services often waste valuable time and money trying to patch together individual
integrations.
Modo solves this problem by connecting companies offering new digital payments
experiences to payments systems worldwide through its payment data exchange, the
COIN® Digital Payments Hub. Companies have a single, secure point of connection to
Modo’s exchange, which allows them to send or receive any source of value to or from
any destination without having to worry about integrations or data system requirements.
This accelerates their time to market, scalability and gives them more partner flexibility.
https://modopayments.com/
Case Study
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https://www.xero.com/us/
A real-time view of your cash flow
Log in online anytime, anywhere on your Mac, PC, tablet or phone to get a real-
time view of your cash flow. It’s small business accounting software that’s
simple, smart, and occasionally magical.
Case Study
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Case Study
Azlo is a new business banking experience created by founders, for founders. With
Azlo, you won’t get hit with minimum balance charges or hidden fees. You won’t
spend time driving to a branch and waiting in line, or juggling multiple tools to view
your transactions and send invoices. Azlo’s mission is to drive economic
opportunity and financial inclusion by empowering a new generation of
entrepreneurs with the tools and knowledge to start, scale, and grow their
businesses.https://www.azlo.com/
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What your Banker Should Know About APIs
• Open APIs are enabling open banking
• Banks are embracing open banking to expand profitability
• Those banks that don’t embrace open banking will be at a
competitive disadvantage
• Corporate clients will begin to demand open banking
applications
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In Conclusion
“Open banking is here, and it is far from being a compliance exercise. What are you going
to do with it? The status quo is changing, opening greater opportunities to create better
product and services.
Open banking doesn’t apply only to banking. Regardless of the business you are in, the
way in which your customers pay, or obtain credit to receive your services, is part of their
experience with your products. Open banking opens them and your company to the
possibility to new types of interactions.
If you take an even wider perspective, the ‘open banking movement’ is tackling head on
some of the challenges that lie at the core of creating a new open market. How can
participants find other market players? How do you trust parties that you don’t know? How
can you exchange sensitive data in a way that is both secure and transparent?”
https://www.ibm.com/blogs/insights-on-business/banking/open-banking-apis-are-open-for-business/
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Questions?