APIdays Singapore 2019 - Promoting Financial Inclusion with an Open Banking Marketplace: Ivan Mortimer-Schutts, Digital Financial Specialist, World Bank/IFC

API-Banking Ecosystem
Development
2 4 A P R I L 2 0 1 9
Supported by:
APIX Platform

2 | Copyright © 2019 ASEAN Financial Innovation Network (AFIN)
APIs are a pivotal instrument in the current wave of (financial) sector transformation
Real Sector Transformation
Open architecture economy
re-inventing almost all sectors
D Derived demand
for Financial Services
paymentslendingtrade
Boosting Digital Market Infra
and diversity
CONTEXT
As components and functions become provided
by specialised independent providers, they need
to be re-integrated in the value chain
Re-integrating value-chain components
Requiring “open architecture”
Banking systems and architecture
therefore need to be incentivized to become more
“open” to facilitate banking as a platform, more
distributed services
Emergence of specialists seeking scale
Ø Internationalisation
Ø Non-regulated entities
Ushering in new services providers and models not
accommodated by current / legacy regulation and
legal frameworks
Innovation impact on financial services
With structural Impact

Consumers
Businesses
Digital & Open
publicprivate
(with selected examples)
All actors across the ecosystem are implicated in this transformation
…breaking out of silos, opening up to an
ecosystem of fintech developers, users
and partners
FINANCIAL INSTITUIONS
…establishing business models that
relies on open banking...or creating their
own proprietary ecosystems
FINTECHS & NONBANKS
CONTEXT
…regulating to facilitate fintech innovation,
competition and open banking market
structures
PUBLIC & INDUSTRY POLICY
PUBLIC INFRA & SERVICES
… making central infrastructure and data
available digitlly, via APIs

API ecosystems can enable financial services to reach untapped demand…but there are market challenges
• Falling cost of infrastructure
• Scalable and robust
• Minimises fixed investments
• Small Markets
- Limited domestic supply
- Cross-border frictions in services trade
- Adaptation and localisation
• Market search and information costs
- Verification and due diligence
- Safety and security concerns
• Banks/FIs still in transition to API based operations
• Regulatory and Supervisory concerns
- Integrity and liability
- Operational stability/continuity
- Consumer protection
- prudential risk
Challenges to expansion (especially in developing markets)Supply Side opportunity
• Low fixed / integration costs
• Low marginal cost / scalable
• Variable cost / Pay as you go
• Inter-changeable / modular
• Expansion of # providers
• Diversification & specialisation
• Scope expansion / integration
CONTEXT

AFIN: a public-private initiative to ‘create the market’
CONTEXT
• Established by international & national stakeholders with complementary roles in promoting
financial sector development, innovation and inclusion
• A Membership based organization to provide open, neutral and collaborative approaches to
financial market evolution
• Supports experimentation, design and deployment of new commercially viable services
that expand support real sector development and financial inclusion
• Providing an industry framework through which to contribute to practical solutions to
emerging fintech-related policy and regulatory challenges
Founding Members

Imagine the possibility …
of serving under-served customers and
Micro SMEs cost effectively
of unlocking new customer segments for
business growth
of launching new propositions swiftly in your
market
Financial
Institutions

…that “does not require” setting
up specialized facilities
No specialized hardware and toolsets
No state of the art innovation facilities
Don’t wait till full modernization of your
technology stack
Financial
Institutions

..and does not take extensive time and cost Financial
Institutions
1Based on market research in ASEAN
2Deloitte Research & Research Report State of Fintech in ASEAN, 2017
3Assuming a fully loaded cost of USD5000/month for 1 FTE
6-8 Months US$0.15m-1m
Low success rate
<40% success rate of
moving prototype into pilot
stage1
High cost of managing innovation
process
A typical ASEAN bank conducts 1-6
FinTech prototypes/year1
Long cycle for Financial
Institutions (FIs)
in FinTech selection, vetting and
prototyping1
30-40%
US$0.3m-0.6m
High cost of internal digital team
(5-10++) to manage innovation with
FinTechs in a bank3
More than 80%
of ASEAN banks do not have
innovation capabilities (labs,
accelerator programs)2 to drive
digital transformation
Current Situation

1. Emerging payment rails
2. Cashless world
3. Alternative lending
4. Shifting customer preferences
5. New market platforms
6. Process externalization
7. Empowered investors
8. Smarter faster machines
9. Crowdfunding
APIX, an open innovation platform, aims to bring digital
financial innovation to markets
Regulators and Policy Makers Engagement
(ASEAN and other
developing countries)
Discover Design Deploy
Discover
“World’s Best”
FinTechs
Design
“Innovative”
Products
Deploy “rapidly”
and “securely”
“Gateway to global FinTech marketplace and Sandbox for rapid prototyping”
FinTechs
(FTs)
Financial
Institutions
(FIs)

How APIX will benefit Financial Institutions (FIs) – 1/3
2. Post and search
problem statements
1. Discover & filter
credible FinTechs
3. Connect with
FinTechs through
Collaboration tools
(Forums, problem statements)
Business Unit
Head
4. Collaborate
through community
5. Manage
organization’s
profile, activity and
privacy on APIX
Instant access to the
best and relevant
FinTechs
Ability to launch new
propositions and
unlock new customer
segments for business
growth
Enablement to serve
under-served
customers and MSMEs
cost effectively
APIX Features Benefits to FIs

Create instant value
through prototyping
with the FinTech APIs
on APIX
Zero hardware and
software for
prototyping
Manage innovation
development lifecycle
through APIX platform
6. Instant access to
FinTech APIs
7. Design and
develop prototypes
on APIX IDE
Technology Head/
CIO
8. Test with readily
available synthetic
data
11. Collaborate on
prototypes using
GitHub
APIX Features
9. Access to self-
service tools and
trainings
Benefits to FIs

Secure platform built
on leading industry
security standards
Standardised NDA for
faster prototyping
Regulatory
engagement through
AFIN
Procurement Head
APIX Features Benefits to FIs
16. Evaluate
credentials of FinTechs
through APIX
Security
Head
17. Standardized NDA
to conduct prototypes
with multiple FinTechs
12. Private space for
development
Compliance
Head
18. Regulators & Policy
Makers Engagement
Benefits to FIs
14. Secure
authentication via oauth
2.0 standards
15. Secured platform -
AWS cloud front and
Web application firewall
13. All APIX traffic is
encrypted

FinTechs face similar challenge of high cost and time
6-8 Months US$0.15m-0.25m
Low success rate of
<20% for moving
prototypes into pilot stage1
High cost of sales effort
that requires 2 people,
sales and technical staff1
Long sales cycle for
FinTechs (FTs) that
requires door to door
selling, contracting and
prototyping1
10-20%
1Based on market research in ASEAN
FinTechs
Current Situation

How APIX will benefit FinTechs (FTs)
Business
Head
Technology
Head
1. Discover FIs problem statements on APIX marketplace
2. Collaboration tools with FI business users
3. Ability to manage information on API catalogue
4. Communicate and collaborate through community
5. Seamless billing and payment though APIX platform
6. Provide profile analytics (API usage, hits etc.)
7. Secure environment to publish APIs
8. Ability to control APIs versioning
9. Ability to control API rates on APIX
10. Tools to communicate and collaborate with FI Development team
11.DevOps Tools, self-service tools and trainings
Instant access to FI
clients
Faster time to
monetization
Seamless
prototype delivery
Benefits to FTsAPIX Features

 Open to Financial Institutions in 22 Markets
 103 FinTechs from over 20 countries
 38 Financial Institutions
 Over 100 APIs published
BROWSE THROUGH WEBSITE – PUBLIC VIEW

BROWSE THROUGH WEBSITE – PUBLIC VIEW OF REGISTERED FI’s

Summary
BROWSE THROUGH WEBSITE – PUBLIC VIEW OF REGISTERED FINTECHS

BROWSE THROUGH WEBSITE – PUBLIC VIEW OF REGISTERED FINTECHS

BROWSE THROUGH WEBSITE – LOGGED IN VIEW, BROWSE FINTECHS MARKETPLA

LOGGED IN VIEW, BROWSE FINTECHS MARKETPLACE - FINTECH INFO

LOGGED IN VIEW, BUSINESS PROCESS CATALOGUE TO ENABLE DISCOVERY

API CATALOGUE WITH PUBLISHED API’s

API DETAILS VIEW

TRY OUT API’s AND RATE API’s

PUBLISH API’s

SANDBOX- IDE (INTEGRATED DEVELOPMENT ENVIRONMENT)

APIdays Singapore 2019 - Promoting Financial Inclusion with an Open Banking Marketplace: Ivan Mortimer-Schutts, Digital Financial Specialist, World Bank/IFC

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APIdays Singapore 2019 - Promoting Financial Inclusion with an Open Banking Marketplace: Ivan Mortimer-Schutts, Digital Financial Specialist, World Bank/IFC

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