If you want to get a glimpse into the future of banking, consider a simple acronym: API.
An API, or application programming interface, is a technology protocol that allows diverse software components to communicate. More to the point, it allows even non-geeks to develop applications that make use of whatever software components a given API taps into.
APIs have been around for a long time, but now we're well into an era in which great technology doesn't only come from innovative startups in Silicon Valley. There's a huge community of empowered users who look at technology not as an end in itself but as a means to get the job done. For them, an API is the mother lode. They're not just using new applications, they're creating them.
Why should that be important to bankers? Because it's important to banking customers. No two people have the exact same needs and interests. Everyone is unique. APIs enable a mass world to be customized for the individual, complete with all of a person's favorite applications and the ability to feed his or her data into those applications as he or she chooses. People today are already used to that type of experience. Just pick up your smartphone and compare it to a friend's. Bet you don't have the exact same content or applications. And if an app doesn't meet your needs, you simply delete it, right?
That's a tough and expensive mandate for a sole financial institution or technology provider to accommodate, but the greater flexibility provided by API technologies means you can... and at speed. The time to market for incorporating the next killer "app" can be weeks versus months and years. And the best part is your financial institution or vendor didn't even have to invent the app your customer wants.
But before financial institutions can deliver such an experience, bankers have to get used to, or rather embrace, another concept: open technology and open platforms. A well-crafted API strategy is dependent both on more open infrastructures and data feeds to enable the development of new applications, while being done in a safe and secure environment. That can be a highly sensitive issue in the world of financial services.
No one is calling for the Wild West here -- we all know the regulatory requirements and customer expectations governing our industry; privacy and security are top priorities to retain customer trust, and uncontrolled data and platform access can undo all kinds of competitive advantages. But the ability to open platforms to API development is a perfect illustration of how the world and how we need to compete in it has changed. It's a critical imperative to make data and platforms more open than ever before.
Innovation in our field is now driven by the ease with which vast amounts of data can be accessed, collated and packaged. This freedom, which comes with new expectations for privacy and security, takes developers and users alike many steps forward in harnessing new capabilities, and that, in turn, benefits banks.
A few years ago killer apps were a big deal. Sure, every technology invariably got better-faster-cheaper, but the killer app was something else altogether. Enhancements and upgrades made the existing room bigger; killer apps opened new doors, even built new houses. For example, the first spreadsheet helped transform the PC from a fun toy into a critical business tool, while some video games, by requiring more power from existing hardware, made them more capable of handling high-bandwidth business applications.
Today, with mobile devices becoming ever more important and new applications emerging from a broad base of sophisticated users far beyond the development community, the environment is even riper for such advances. We might not see only one killer app, but many. Moving forward, financial institutions can make the customer experience more relevant to each user by including their own favorite apps in the solutions they offer.
In fact, let's go even further. We need to do more than just open up our data to speed the development of new apps and make them look and feel unified for the user -- we have to make services available to help the innovators out there actually power those apps.
So let's be clear: We have to let customers share their data with the solutions they choose, welcome non-developers into the technology mix, and become service providers to those using our resources to create their own apps?
Exactly. It's a whole new world out there, and playing by a completely new set of rules is the only way to survive and thrive. Anyone else will get left behind.
CeCe Morken is senior vice president and general manager, Intuit Financial Services.