Skip to content

Our Privacy Statement & Cookie Policy

All Thomson Reuters websites use cookies to improve your online experience. They were placed on your computer when you launched this website. You can change your cookie settings through your browser.

Innovation

Open Platforms: The future of FinTech

Bharat Rathod  Market Development Lead, Financial - Thomson Reuters, South Asia

Bharat Rathod  Market Development Lead, Financial - Thomson Reuters, South Asia

Open platforms are a chance for the financial industry to display the innovation, ease of use and flexibility consumers are demanding.

We are living in an age where an idea can progress from paper to reality in no time flat, almost overnight becoming the “new normal.” People used to “Xerox” a document, now Amazon is the new shopping hub and Uber is the disruptive force that has changed the face of public transportation. While it is difficult to predict what the future of financial services will be like a decade from now, the sector will continue to be driven by cutting-edge technologies such as open platforms, or open application programming interface (API)

Three years ago, Gartner predicted that by 2016 75 percent of the top 50 banks in the world would open their API and 25 percent of these would have app stores for customers. Today, embracing an open platform strategy has become crucial to a fundamental shift in the financial industry landscape.

An open platform is a plug-and-play business model that allows multiple participants, including producers and consumers, to connect and interact with each other, and create value beneficial to all stakeholders. A key characteristic of a well-designed platform is that it can be programmed through APIs and is consistent in common operations such as authentication, authorization, data models and entitlement.

An example of a robust Open Platform is Salesforce, the American cloud computing company, which has software, content, third-party developers and an entire ecosystem of app developers. It allows users to perform key functions and integrate its own sales data with that of other potential third-party data. Once you have embedded Salesforce into an organization, it is powerful, scalable and hard to replace. It is imperative for financial services companies to follow suit and innovate by adopting open platforms.

But how can open platforms drive effective innovation in financial services? Here is a checklist.

 Innovation

Customer demand has led to various disruptions in the retail space, which in turn has led to a host of digital and mobile applications that are fairly intuitive and can intelligently tag people, places, events, and cater to various financial services, including banking and wealth management. The idea of an API-based Open Platform is to make this content and analytics available across digital channels and internal portals, then link Big Data to deliver insights for effective and efficient decision-making.

Collaborative ecosystem

Participation from a wide range of players creating apps (instead of just providing raw data) spurs innovation. While data providers may continue to make available leading industry insights and content, open platforms allow clients, third parties, and FinTechs to build new transformative apps that provide clients with greater choices. These apps significantly enhance their decision-making abilities.

Trust

As innovation thrives on open platforms, there is an underlying need for trusted data, scalable infrastructure and far-reaching distribution and marketing channels. Apple’s App Store, to provide one example, imposes strict restrictions on developers, thus ensuring their complete trust. Similarly, the ability of open platforms to ensure compliance and provide credible data is a critical aspect.

Flexibility

Users expect everything to be available on the go — seamless updates, real-time information and ease of operations. The imperative to balance choice and control underscores the need for an open platform to handle activities such as administration, compliance, authentication and other vital services.

Standards

Standards help create a level playing field and foster and expedite innovation. Open APIs, Web standards (HTML5), and administrative procedures and controls are a few examples of standards that facilitate more efficient business development and transformation.

Experience

The key ensuring greater use of open platforms is to offer a frictionless experience through common global data models, taxonomies and system procedures, thus empowering consumers and partners to innovate at a faster pace without relying on intermediaries or institutions.

Considering the challenges and opportunities in the financial services sector, it is inevitable that we will see innovative problem-solving apps across the industry. The question is who will go first to create the platform that allows exponential innovation?

With a clear open platform strategy and focus on collaboration, financial institutions will offer services to help them stay ahead of disruption, and perhaps even become disruptors themselves.


Learn more

Our reports Are you ready for blockchain? and 2018 AI Predictions are now available for complimentary download.

  • Facebook
  • Twitter
  • Linkedin
  • Google+
  • Email

More answers