20211027 apidays london - business model innovation final v1.0 (1)

Business Model Innovation in
Finance via Open APIs:
new growth opportunities and
new propositions
Jeremy Larsson
MD, GrowthSmart Consulting
27th October 2021

Jeremy Larsson
Managing Director at GrowthSmart
• Mentor at 4 leading Global FinTech Accelerators
• Associate Director, FinTech Programme, LIBF
• Non-Executive Director of 2 FinTechs
• Keynote speaker and podcast panellist
• Former roles include:
• UK GM and Director of Strategic Partnerships,
CurrencyFair
• Founder GM of Telegraph Financial Services
• Head of Product and Commercial, John Lewis Finance
• Global Head of Innovation, SME Banking, RBS Group
• Director of Strategy Consulting, AMS UK
Slide 2

• How Open APIs, Embedded Finance & the emergence of Banking-as-
a-Service (BaaS) combine to create disruptive FinTech models
• Share examples of key FinTechs who are winning with better, easier-
to-use and more value-adding propositions and customer experiences
• How can you compete among the new Open Banking / API models
and what are your options to take advantage of opportunities
• Where does the future lie: will Open APIs, Open Banking and
Embedded Finance change Financial Services as we know it?
What are we covering in this presentation
© 2021 GrowthSmart Consulting Limited
3
Slide 3

Open APIs have transformed the way in which Finance is experienced…
Limitless Reach &
Access
• Entire transactional record of consumers and businesses becomes accessible and can be consolidated
• Data sharing ease enables more opportunities for more products to more people and businesses
Ultra-Transparency
• Real-time, holistic, “Single Customer View” of an individual’s or business’s Financial Life
• Whole-of-market range across all financial products, from all providers
• Instantaneous Price and Product-feature comparison across product providers
Rebalancing
Consumer Power
• Customers will have the power to “pull” the right product / price / volume rather than be “pushed”
• “Agency” platforms will drive more power back into the hands of customers (e.g. autoswitch)
Embedded Finance
• Unbundling of the traditional Financial Services Value Chain hugely exacerbated by Open APIs
• That unbundling and Open APIs makes Embedded Finance – the ability of non-financial companies to
offer financial services directly to customers at the point of need - happen
Personalisation
• Matching of Product / Price / Volume combination to real-time financial health, facilitated by AI / ML
• In combination with new data sources (e.g. online footprint; social), products can be proactively
formulated based on changing circumstances and life stages
Slide 4

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Open APIs and Embedded Finance have led to a wave of customer propositions
• Travel (B2C): Instant travel cover when booking a flight – or just before take off!
• Retail (B2C): Flexible finance at the point of sale
• Transport (B2B & B2C): On demand motor insurance before freight delivery, car hire or car journey
• Social / Peer-to-peer (B2C): Fuss-free payments to anyone in your network
• Ride-hailing (B2C & B2B): Payment embedded into app. Driver insurance on demand per trip.
• Pay Day Advances (B2B2C): Salary finance immediately available at point of need
• Mortgages (B2B2C): Mortgage application & offer within home buying app
Slide 5
Source: GrowthSmart Consulting

Open APIs are accelerating the “unbundling” of the Financial Services Value Chain
The abstracting of banking & insurance functionality – payments; debit / credit; insurance; investments - into
technology to enable any company to integrate any financial service into their offering and deliver it directly to customers
will give rise to new, on demand and relevant proposition opportunities…
Source: 11FS; GrowthSmart Consulting
Slide 6

Scalable new business models have been created from this unbundling…
Slide 7 © 2021 GrowthSmart Consulting Limited
Brands that ‘Embed’ Finance
into their offering
New ‘Banking as a Service’
tech to make it happen
Banks that provide
‘Banking as a Service’

Marketplace
Builders
Payment
Processing
Platforms
API Portals
Banking
Platform
Integrators
Financial Data
Providers
Banking-as-a-Service - the middle layer - is enabling new business model innovation
Slide 8

• Building FinTech
marketplaces for
Banks and FinTechs
• Combine API Portal
capabilities
• Neo-Bank
Architecture: all the
core banking
processes stitched
together
• Forward thinking
Banks
• The Open API “Pipes”
• AISPs and PISPs
• Manipulate, assimilate
& streamline Bank
data for use by 3rd
parties
• FinTechs who provide
their APIs to third
parties
• FX, Lending, Savings
• Payment acceptance
& processing for
consumers & SMEs
• Multi-currency
• Treasury services
API Portals
Banking
Platform
Integrators
Marketplace
Builders
Payment
Processing
Platforms
Financial Data
Providers/
FinTechs
Banking-as-a-Service has 5 key components. Competition is intense in each market.
Slide 9

Banks, Wealth, Payments & Insurers
Non-Financial Brands
Digital
Challengers
Traditional
Incumbents
How do businesses compete differently using Open APIs & Embedded Finance
CX catch-up & B/S utilisation Finance Marketplace & Data Play
Seamless CX & Rise of the Super App
Superior CX & Loyalty Play
Slide 10

nabyPay: Payments re-imagined using Open APIs
An innovative new SME-focussed Mobile Payments platform which resolves key SME pain points, nabyPay is the
ultimate in speed, flexibility, hardware-free, low cost and multi-use case for small business and consumer payments.
Problems
• High transaction fees / set-up costs
• Hardware requirements
• Payment method constraints
• Card Fraud & Privacy
• Long settlement times
• Carbon impact – card/terminal
• Limiting mobile
FinTech & Open Banking Solution
• 360° Payments: Connects to ALL
payment methods and between all
parties – business & consumer
• Proximity matching & QR codes
• Secure & Private
• Greener
• Ultra-low cost
• Payments – just done better via
Mobile and Open Banking!
Multiple Use Cases
• Mobile B2B payments · Retail F2F payments · Invoice payments
• Parking / Tolls · Supply Chain / eCommerce · Peer-to-peer payments
…and many more….
Slide 12
Source: nabypay.com; GrowthSmart Consulting

Key opportunity areas: underserved Verticals and Horizontals
Verticals
(Under-exploited and untapped)
Horizontals
(New and enhancing capabilities)
• Trade & Logistics
• Health and Wellness
• Longevity & cross-generational
• Media / Gaming
• Manufacturing & Supply-Chain
• Energy
• Mobility / Transport
• Education
• Construction & Real Estate
• Urban Planning
• Finance Decision
Optimisation
• Proposition Personalisation
• Customer Agency
• “Next Best Action”
• “Financial Life Management”
Slide 13

Mexico
Heru: partnering with
Uber Eats to offer
banking to merchants
& customers
Argentina
Mercado Libre:
marketplace offering
banking to users
Senegal
Free Money /
Comviva: payments,
currency transfers via
MNO to >10m Kenya
Lami: Insurance-as-a-
service via ‘phone &
crop sellers
India
Jumbotail: supply chain
marketplace and POS
credit & banking to
>15m grocery stores
Singapore
Grab: P2P payments
& micro-lending via
ride hailing app to
>350m
Indonesia
Go-Jek: banking &
micro-lending via ride
hailing app to >100m
A global wave of disruptive Embedded FinTech models is underpinned by Open APIs…
Slide 14

Scope for API-driven disruption in Financial Services is enormous...
Open
Banking 1.0:
ecosystem
creation
2017 - 2021 2021 - 2022 2023 - 2025 >2025
Value Chain Unbundling
& Specialisation
• Accessibility of data sources
• Rise of BaaS
• Product marketplaces –
Consumer and B2B
• Nascent embedding
• Increasing transparency &
availability of products
Open
Banking 2.0:
pervasive
applications
Widespread customer &
business use and adoption
• Nascent personalisation
• Meaningful BigTech entry
• Significant investment &
acquisition
• Radical new innovations
emerging: Use Cases and
Marketplaces
Open
Banking 3.0:
customers
are in
control
Horizontal consolidation &
new horizontal capabilities
• Seamless integration of
embedded APIs across
most B2C and B2B
• Wholesale consolidation
• Proposition personalisation
• True “Finance Decision
Optimisation”
The New
Normal
“Just the way Finance is”
• True “Customer Agency”
• Ubiquitous integration within
verticals & across verticals
• “Financial Life Management”
✓
Slide 15

✓What propositions could you build from Open APIs and Embedded Finance: a near $8trn opportunity beckons
where consumer & business need can be served better via Embedded Finance
HOMEWORK: What’s your business model innovation opportunity?
✓Customers & Differentiation: what are customers’ key financial requirements at the point of need in their journey?
• What new customer audiences & segments can be reached and acquired?
• How will this become a key differentiator and make your business stand out
✓Capabilities: what do you need to create a new Open API and Embedded Finance business model?
✓Partnerships: More than ever, this strategic competency will distinguish the winners in this ecosystem
✓Innovation: How can you create truly new business models & propositions which leverage a customer’s transaction
data & digital footprint to ultra-personalise products / price / volume by life stage and channel
✓Competitive Strategy: What will lower barriers to entry for offering Finance products have as an impact on your
business – negative and positive? How can you grow and defend against new threats?
Slide 16 © 2021 GrowthSmart Consulting Limited

My model for business is The Beatles: They were four guys
that kept each others’ negative tendencies in check; they
complemented and balanced each other out. And the total
was much greater than the sum of the parts.
- STEVE JOBS

Jeremy Larsson
Managing Director at
GrowthSmart
jeremylarsson@gmail.com
+44 (0) 7838 126821
Business Model Innovation via Open
APIs: new growth opportunities for
platforms & new propositions for
customers
27 October 2021

20211027 apidays london - business model innovation final v1.0 (1)

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