Power plays for Monetizing Open Banking APIs

POWERPLAYSFOR
MONETIZING
OPENBANKINGAPIS
Turning Open Banking into an
opportunity to drive growth
and reduce costs

THE RISEOFTHEAPI
ECONOMY
THE API ECONOMY HAS
EXPLODED OVER THE PAST
DECADE
Expedia provides API based tool generated over 85%
of Expedia’s revenues
eBay’s Buy APIs have generated $1bn+ gross
merchandise sales in 3 years
Visa paid $5.3bn for API-driven fintech Plaid
POWER PLAYS FOR MONETIZING OPEN BANKING APIS2 Copyright © 2020 Accenture. All rights reserved.

OPENBANKINGPULLS
BANKSINTOTHE API
ECONOMY
Open Banking regulations pull banks into the
API economy and the broader financial services
ecosystem, offering an opportunity to emulate
the learnings and successes from tech
platform companies and fintechs. Leading
banks in the UK and Europe are looking beyond
regulatory compliance towards monetization of
Open Banking services and interfaces.

LESSONSFROMEUROPEFOROTHER
MARKETS
Banks operating in markets where Open Banking
regulations are less mature are finding inspiration from
Europe about how they can implement Open Banking
regulations with monetization in mind from the outset.
This could position them to adopt future-proof
technologies and business models that are primed for
long-term competitive advantage.

LEADING BANKS REORGANIZE THEIR
BUSINESSFOROPENBANKING
TOKEEP PACE WITH FINTECH INNOVATORS, THE LEADING INCUMBENT BANKS ARE:
Re-evaluating their operating models
Investing in open technology architecture
Rethinking data management needs
Finding new ways of working with ecosystem
partners

OPENBANKING BUSINESSMODELS
Banks can leverage their brands and customer bases to partner with other firms and offer new
innovative services. Most banks will choose between two Open Banking business models:
BANKING AS A PLATFORM BANKING AS A SERVICE
A bank aggregates its traditional services with
digital and new services from third party
partners and offers new services on its own
channels.
Allows banks to use APIs to distribute core
financial services products through third-
party or partner-owned channels.

USECASESFORBANKING ASAPLATFORM AND
BANKING ASASERVICE
Personal Financial Management: Aggregation of bank
accounts and financial services for retail customers to
enable better financial management.
Accounting Platforms: Partnerships with accounting
platform providers for easier payments and receivables
reconciliation.
Invoicing and Request to Pay: Invoicing, receivables
management, payment of e-invoices and request to pay.
Marketplaces: Financial and non-financial marketplaces
offering best-of-breed products/services to customers.
Product Origination: Account opening directly from
third party or partner’s web site or app.
Car Loans: Offering car loans as an integrated part of the
car purchase journey in partnership with car dealerships.
Treasury: Treasury, cash management, international
payments offered as APIs for integration into ERP/TMS.
Buy Now Pay Later: Pay in easy instalments initiated
through e-commerce websites.
Industry Initiatives: Industry alliances with partners such
as telecoms and airlines, e.g IATA Pay, an industry-supported
initiative in which payments for airline tickets are made from the
customer’s bank account directly into the bank account of the
merchant.

THE BENEFITS OFBANKING ASAPLATFORM AND
BANKING ASASERVICEFORBANKS
Generate new revenue streams by cross- and up-
selling of the new services and products.
Attract more customers with the wide range of
products and tailored offerings.
Accelerate speed to market and enhance the
quality of product offerings.
Reduce costs for developing new offerings.
Expand distribution channels and market reach via
access to new customers.
Generate new revenue streams by selling services
and products through partners.
Develop faster go-to-market opportunities by
accessing the new customer base.
Reduce operating and marketing costs for
products and services.

Referral Fee: The third party pays the bank for listing and selling its
product via the banking distribution channel. Depending on the
type of the product, this may be structured as:
• Fixed Fee
• Unit Based Fee
• Transaction percentage Fee
Revenue Sharing: In some cases the third party may reach
agreement with the bank on a shared-revenue model. This is
suitable for more complex products. Examples: investments,
savings and commercial loans.
DIRECTANDINDIRECTMONETIZATION FOR
BANKING ASAPLATFORM
Banks that pursue a banking-as-a-platform model can offer third-
party products access to the bank’s distribution channels, in return
for a fee from the third party.
DIRECT MONETIZATION
Banks pursuing a banking-as-a-platform model can also leverage
Open Banking to increase their customer base, lower operating
costs or improve efficiency.
INDIRECT MONETIZATION
Customer Acquisition: Banks can acquire new customers or
expand into newer markets and boost their market capitalization
Lower Product Costs: Banks can also experiment with new
offerings and offer, through partnerships, products which they
don’t currently manufacture in a cost-effective way. They can
significantly reduce their go-to-market costs for new services and
products and, in some cases, reduce their risk exposure and
liabilities.
Efficiency Gains: Banks can simplify certain processes using APIs,
resulting in reduced internal costs. For example, mortgage costs
can be optimized by using own and partner APIs to reduce the
paper documents that customers need to present and cut down on
manual processing in the decisioning process.

DIRECTANDINDIRECTMONETIZATION FOR
BANKING ASASERVICE
DIRECT MONETIZATION
Banks that pursue a banking-as-a-service model can get paid by third
parties for the use of their APIs, or they can use the third parties to
distribute their APIs on their behalf, for a fee.
Freemium: A popular way to provide access to an API product is by
offering it for free up to a predefined limit and charging for the use of
features beyond this limit.
Third Party Pays: Beyond free access, it is important to establish a
model where the third party pays to use the APIs that typically serve
its needs:
• Tiered
• Pay as you go
• Unit- based
Third Party Gets Paid: In some cases, banks pay third parties for using
their APIs, especially if these APIs generate new product or service
revenues for the bank:
• Pay per Click
• Pay per Acquisition
• Referral
INDIRECT MONETIZATION
Banks that pursue a banking-as-a-service model can leverage APIs to
increase reach and awareness, improve partner integration or
reduce costs.
Increased Reach and Awareness: Other distribution channels, could
be used to grow the customer base and cross-sell to the existing or
new customers.
Improved Partner Integration: Banks can improve the partner channel
experience by introducing banking APIs as a part of day-to-day
customer journeys
Reduce Costs: Banks can use APIs to optimize their internal processes
and reduce costs.

SOMEBANKSAREPURSUINGFINTECH
PARTNERSHIPSTOENHANCEVALUE-
ADDED SERVICESANDCONSOLIDATEA
WIDERANGEOFFINANCIALSERVICESIN
ONEPLACE.
For example, Starling Bank’s Starling Marketplace offers
investments (via Wealthsimple), pensions (PensionBee),
invoice insurance (Nimbla), mortgage origination
(Habito) and business loans (Growth Street).
CHOOSINGPARTNERS
INTHE EVOLVING
OPENBANKING
ECOSYSTEM

CROSS-INDUSTRYPARTNERSHIPSIN
OPENBANKING
USE CASE EXAMPLES
Personal Finance Mgt Starling + Emma; ABN Amro + Tink
Shopping, Offers, Loyalty Monzo + flux
Shopping Paydirekt (40+ banks, 1100+ retailers)
Accounting, Bookkeeping Starling + Xero; RBS + FreeAgent
Digital Banking FidorBank + Telefonica
Insurance N26 + Allianz Assistance
Real Estate DBS + EdgeProp
Travel Bookings DBS + Expedia + Singapore Airlines
Travel Payments Deutsche Bank + IATA
PARTNERSHIPS
Bank + Fintech
Bank + Fintech
Bank + Retail
Bank + Fintech
Bank + Telecom
Bank + Insurer
Bank + Property Portal
Bank + Travel Portal + Airlines
Bank + Industry Body

OPEN BANKING IS AN
INNOVATION THAT IS
TRANSFORMING THE
INDUSTRY. TOMORROW’S
WINNERS ARE DECIDING HOW
BEST THEY STAND TO GAIN
FROM IT.
POWER PLAYS FOR MONETIZING OPEN BANKING APIS13
OPEN BANKING:
A BRAVE NEW WORLD
Copyright © 2020 Accenture. All rights reserved.

DOWNLOAD THE REPORT
FOR MORE INFORMATION
CONTACT THE AUTHORS
AMIT MALLICK
Managing Director – Global Open Banking & API
Lead amit.mallick@accenture.com
ANDREW MCFARLANE
Managing Director – Payments and Open Banking,
Canada andrew.g.mcfarlane@accenture.com
EWA WOJCIK
Manager – Payments and Open Banking
e.wojcik@accenture.com
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Delivered are trademarks of Accenture. This document is produced by consultants at Accenture as
general guidance. It is not intended to provide specific advice on your circumstances. If you require
advice or further details on any matters referred to, please contact your Accenture representative.
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www.accenture.com/MonetizeOpenBanking
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Power Plays for
Monetizing Open
Banking APIs

Power plays for Monetizing Open Banking APIs

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