# Arrested development? What banks don’t get about the API economy
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2018-03-21
Category: BANKING
Category URL: https://financedigest.com/category/banking
Meta Title: Open Banking Insights: Lessons from the Mobile OS Market
Meta Description: Discover how mobile OS giants like Apple and Android succeeded by prioritising developer-friendly systems, and why interoperability is key in open banking.
Tags: featured
Tag URLs: featured (https://financedigest.com/tag/featured)
URL: https://financedigest.com/arrested-development-what-banks-dont-get-about-the-api-economyhtml

![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/fd210318-2-1736842907195-compressed.jpg)

The open banking ecosystem can learn a lot from the smartphone operating system (OS) market. In particular, banks that are developing APIs in a bid to control the new ecosystem should ask themselves this:

_Why did the mobile operating systems of Nokia, Bada, Symbian and Blackberry (among others), fail?_

Like most high [growth markets](https://www.financedigest.com/multi-functional-point-of-care-testing-market-growth-analysis-opportunities-trends-developments-and-forecast-to-2028.html "Multi-Functional Point Of Care Testing Market Growth Analysis, Opportunities, Trends, Developments, And Forecast to 2028"), the mobile OS industry evolved according to the classic competition cycle: from the micro-monopolies of early innovators, to the market fragmentation caused by excessive competition, followed by retrenchment and finally consolidation, around two OS giants: Apple and Android.

What swung it for them? Both [Apple and Google](https://www.financedigest.com/s-korea-parliament-committee-votes-to-curb-google-apple-commission-dominance.html "S.Korea parliament committee votes to curb Google, Apple commission dominance") knew early on that the global developer community could produce more and better apps than they could achieve in isolation. Armed with this knowledge, they set about purpose-designing their [systems to make it easy for developers](https://www.financedigest.com/dynamic-positioning-system-market-notable-developments-geographical-outlook.html "Dynamic Positioning System Market: Notable Developments & Geographical Outlook") to create apps for them, and invested heavily in supporting their innovations. Both firms knew that the [market would identify the killer apps](https://www.financedigest.com/sales-forecast-of-mental-fitness-apps-market-analysis-and-forecast-report-till-2031.html "Sales Forecast of Mental Fitness Apps Market , Analysis, and Forecast Report till 2031"), not them, and these would most likely come from third parties, like WhatsApp, Uber and Snapchat. All they had to do was make sure these apps were written for their platforms.

Put it another way: Most [developers have neither the appetite nor the resources to write applications for more than two or three different systems](https://www.financedigest.com/turbo-compounding-systems-market-development-status-competition-analysis-type-and-application-2026.html "Turbo Compounding Systems Market Development Status, Competition Analysis, Type and Application 2026").

Back to [open banking](https://www.financedigest.com/why-open-banking-is-safe.html "WHY OPEN BANKING IS SAFE?"), and let’s fast-forward five years: the API-led open banking revolution powered by PSD2 has happened. Myriad third-party data and payment apps are readily available to consumers, from all manner of providers: retailers and e-commerce giants, device makers, independents, banks, payment networks, [social media](https://www.financedigest.com/top-social-media-growth-companies-in-the-uk.html "Top Social Media Growth Companies in the UK") platforms… Thanks to these new interfaces, some consumers barely interact directly with their bank. Others favour their [bank’s own apps](https://www.financedigest.com/why-you-should-use-a-mobile-banking-app-and-how-to-make-the-most-of-it.html "Why You Should Use a Mobile Banking App – and How to Make the Most of It") and services. The key here is that [banks’ customers](https://www.financedigest.com/how-close-can-banks-get-to-their-customers.html "How close can banks get to their customers?") have a secure, digitised user-experience like never before, one driven by freedom of choice and convenience.

What [needs to happen today](https://www.financedigest.com/cfos-need-to-embrace-todays-technology-for-tomorrows-success.html "CFOs need to embrace today’s technology for tomorrow’s success ") to enable this vision? Interoperability.

When all bank APIs successfully interoperate, third party apps will flourish and the [expectations of today’s digitised consumer](https://www.financedigest.com/keeping-up-with-heightened-consumer-expectations-in-financial-services.html "Keeping up with heightened consumer expectations in financial services") will be met.

The big question is ‘which OS will underpin it all?’

Again: developers will only write to two or three different platforms. Unless a [bank is convinced it can become one of these, any proprietary APIs it develops will likely deter developers, not attract them, and as a result the bank will limit the variety and the quality of third party apps it can offer to its account](https://www.financedigest.com/scams-avoided-how-to-prevent-bank-account-scams-in-2023.html "Scams Avoided: How to Prevent Bank Account Scams in 2023") holders.

Ultimately, this will [drive its customers](https://www.financedigest.com/customized-innovation-to-drive-the-human-microbiome-market.html "Customized innovation to drive the Human Microbiome Market") away.

As open banking begins to [gain traction](https://www.financedigest.com/carmine-color-market-will-gain-traction-at-7-9-amid-growing-preference-for-natural-food-ingredients-fmi.html "Carmine Color Market Will Gain Traction at 7.9% amid Growing Preference for Natural Food Ingredients: FMI") around the world, the traditional closed-ranks business model that has served banks well for hundreds of years must now evolve.  Those with the vision to embrace truly [open APIs will be able to capitalise on early differentiation in the open banking era](https://www.financedigest.com/why-open-banking-heralds-a-new-era-of-ecommerce-merchant-and-bank-collaboration.html "Why Open Banking Heralds a New Era of eCommerce Merchant and Bank Collaboration"). And with turnkey open banking solutions now available, banks can leapfrog their legacy system [challenges and start acquiring new customers and new revenues](https://www.financedigest.com/multigrain-bread-mix-market-size-share-top-leading-companies-consumption-drivers-trends-forces-analysis-revenue-challenges-and-global-forecast-2029.html "Multigrain Bread Mix Market: Size, Share, Top Leading Companies, Consumption, Drivers, Trends, Forces Analysis, Revenue, Challenges And Global Forecast 2029") in open banking, today.

Keen to learn more? Check out our [How to Avoid Head in the Sand Open Banking eBook.](https://token.io/files/ebooks/HeadInTheSandOpenBanking.pdf?utm_source=iseepr&utm_medium=PR&utm_campaign=HITS%20Download&utm_content=Blog)

Banks, merchants and developers interested in accessing any bank should register at [https://token.io/allbanks](https://token.io/allbanks).


---
This blog is powered by Superblog. Visit https://superblog.ai to know more.
---