# How FS organisations can use subscriptions to get ahead in the API economy
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-10-12
Category: BANKING
Category URL: https://financedigest.com/category/banking
Meta Title: How FS Firms Can Maximise Revenue Through Subscription
Meta Description: Discover how FS firms can maximise revenue and growth by embracing APIs and subscription models, moving beyond traditional banking services.
URL: https://financedigest.com/how-fs-organisations-can-use-subscriptions-to-get-ahead-in-the-api-economyhtml

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_By **Michael Mansard,** Principal Director – Subscription Strategy at_ [_Zuora_](https://www.zuora.com/)

In today’s competitive environment, FS (Financial Services) firms around the world are all looking to do the same three things; increase their growth opportunities, improve their client experience and enhance their operational efficiency. Many are embracing APIs (Application Programming Interfaces) as a means to achieving these goals.

By improving the flow of data and information across operations, APIs open communication channels between programs and businesses and, in doing so, act as a bridge between digital services, allowing one app to access information or capabilities from another. This gives them the chance to monetise a capability and resource directly, making [launching new services](https://www.financedigest.com/heritage-launches-multi-car-insurance-service.html "Heritage launches Multi-Car insurance service") and projects easier and more effective.

But, whilst the [benefits of the API economy](https://www.financedigest.com/a-two-way-street-chinese-investment-in-the-uk-will-benefit-both-economies.html "A TWO WAY STREET: CHINESE INVESTMENT IN THE UK WILL BENEFIT BOTH ECONOMIES") could be endless, many FS firms are currently missing a trick. By focusing too much on [meeting the immediate regulatory requirements](https://www.financedigest.com/lack-of-collaboration-and-skills-shortage-is-limiting-organisations-ability-to-meet-ifrs-9-requirements.html "Lack of collaboration and skills shortage is limiting organisations’ ability to meet IFRS 9 requirements") associated with APIs, they are failing to see that they are much more than just a new digital channel. All effort is going into indirectly monetising APIs through [service enablement – in the hope](https://www.financedigest.com/decline-in-german-services-sector-eases-raising-hopes-for-milder-recession-pmi.html "Decline in German services sector eases, raising hopes for milder recession -PMI") that the revenue will be driven by the underlying ‘product’ – instead of directly monetising the APIs themselves. This is where new [business models](https://www.financedigest.com/7-factors-to-consider-before-your-business-moves-to-a-subscription-model.html "7 Factors to Consider Before Your Business Moves to a Subscription Model") – such as subscription services – can help.

**Beyond Banking**

In the API economy, the most successful FS firms will be those that investigate new and differentiated monetisation scenarios from the outset. This will enable them to make the most of APIs beyond the requirements and [create new sustainable](https://www.financedigest.com/creating-sustainable-value-through-responsible-investment.html "Creating sustainable value through responsible investment") revenue streams.

[Subscription models](https://www.financedigest.com/the-rise-of-the-subscription-model.html "The rise of the subscription model") – which charge customers a recurring fee at regular intervals to access a product or service – could enable FS firms to grow beyond their core and maximise revenue from new digitally-powered offerings. At their heart, subscriptions are all about giving the customer what they want. By collating a substantial amount of usage data, they offer the [businesses implementing them the opportunity](https://www.financedigest.com/challenger-banks-missing-golden-opportunity-to-steal-business-from-competitors-by-repeating-same-old-mistakes.html "Challenger Banks Missing Golden Opportunity To Steal Business From Competitors By Repeating Same Old Mistakes") to engage with their customer base and adjust their services to match demand, whether it’s to do with pricing or delivering continuous value. This customer centricity is why their popularity is only increasing, with Zuora’s recent  [End of Ownership Report](https://www.zuora.com/resource/the-end-of-ownership/) finding that 77% of UK adults currently are signed up to at least one subscription service. In fact, companies that embrace these models have grown at [400% on average](https://www.zuora.com/resource/subscription-economy-index) over the last eight and a half years, outpacing S&P 500 revenues by almost six times during the pandemic last year.

When it comes to the current API-driven landscape, subscriptions could open up a whole new world of possibilities for FS firms, especially those that have a significant audience with homogenous needs and pain points. The current level of connectivity and [sharing of data](https://www.financedigest.com/shares-steady-dollar-gains-ahead-of-u-s-inflation-data.html "Shares steady, dollar gains ahead of U.S. inflation data") means that a company can use APIs as an activation layer, opening up a suite of services from across its ecosystem – this includes other business units within the company’s group and also third-party services – to solve those key problems.

In the B2B space this means that an organisation could provide a one-stop-shop, incorporating banking, accounting services and payroll services in one package. For example, Starling [Bank has used a platform](https://www.financedigest.com/danich-local-and-regional-banks-launch-mobile-wallet-powered-by-nets-new-hce-and-tokenisation-platform.html "DANICH LOCAL AND REGIONAL BANKS LAUNCH MOBILE WALLET POWERED BY NET’S NEW HCE AND TOKENISATION PLATFORM") model to create one of the best marketplaces in the UK, offering customers an extremely wide portfolio of products, including insurance services, loyalty schemes and accounting solutions for businesses, as well as mortgage products through its partnership with Habito. Meanwhile, both [DBS](https://www.digfingroup.com/dbs-api/) and [BBVA](https://www.bbvaapimarket.com/en/) have invested heavily in APIs, using them to offer customisable solutions and personalised experiences to their clients.

Bigtechs are also starting to use APIs to embed [financial services](https://www.financedigest.com/how-financial-services-leaders-can-prioritise-cybersecurity-investment.html "How financial services leaders can prioritise cybersecurity investment") within their core offering. According to Andreessen Horowitz, such an approach “can increase revenue per customer by two to five times.” Shopify is a great illustration of such an approach, which moves beyond “payments-only” and embeds financial services solutions to capture more value. It’s customers can now use one platform to launch their online store, sell through multiple channels, and [manage everything related to operating their business:](https://www.financedigest.com/finance-management-for-small-business.html "Finance management for small business") products, inventory, payments, and shipping.

**Free to fee**

FS firms are currently sitting on an API gold mine. However, with many potential revenue streams up for grabs, they [need to be careful not to fall into the age-old trap of offering valuable services](https://www.financedigest.com/top-5-seo-services-you-need-to-succeed-in-2022.html "Top 5 SEO Services You Need To Succeed In 2022") for free.

For those in the industry, the traditional freemium model – in which [customers are not charged for additional services](https://www.financedigest.com/video-collaboration-is-pushing-the-boundaries-of-the-customer-experience-in-financial-services.html "Video Collaboration is pushing the boundaries of the customer experience in Financial Services") – does make sense sometimes. For example, when [services are given away in hope of acquiring customers or generating additional revenue](https://www.financedigest.com/adding-revenue-through-rd-tax-relief-service-2.html "Adding Revenue through R&D Tax Relief Service") down the line. When [interest rates](https://www.financedigest.com/ecbs-centeno-says-interest-rate-close-to-peaking-if-no-new-shocks.html "ECB’s Centeno says interest rate close to peaking if no new shocks") were high and fees were not as transparent, this was a sustainable cross-subsidisation strategy. However, all too often, FS businesses will now default to this model. It’s become habitual and, like most bad habits, is likely to be difficult to break. After all, once customers are used to getting something for free, why would they want to start paying for it?

However, it’s crucial for FS firms to get strategic and take a hard look at their offerings to determine what they can charge for without losing customers. Services like benchmarks, advisory, audits and [data analytics could be monetised as long as the additional value of the service](https://www.financedigest.com/can-financial-services-organisations-harness-data-and-bi-to-catch-up-in-the-digitalisation-race.html "Can financial services organisations harness data and BI to catch up in the digitalisation race?  ") paid for is clearly articulated and accepted by the customer. For example, UK neobank Monzo had to relaunch its paid subscription tier, “Monzo Plus,” after stopping its initial product following a 5-month experiment. The second attempt seems as if it will be a lot more successful in driving more perceived value: it converted 50,000 subscribers in the first month, even though [paying for such services is new for UK consumers](https://www.financedigest.com/best-paying-jobs-in-finance-consumer-services.html "Best Paying Jobs in Finance Consumer Services").

The simple fact is that today’s customer is willing to [pay for a service if they see](https://www.financedigest.com/uk-employers-see-slight-fall-in-pay-awards-over-2023-xperthr.html "UK employers see slight fall in pay awards over 2023 – XpertHR") it as valuable. In fact, [recent research](https://www.zuora.com/press-release/banking-on-the-subscription-economy-consumer-demands-drive-the-shift-to-services-from-their-banks/) discovered that over half of consumers are open to paying a bank subscription fee for additional personalised services. This is something that other industries have already cottoned on to. In the B2C space, many media outlets have already shifted from relying on advertising revenue to monetising readership. Meanwhile, when it comes to B2B, servitisation – where [companies move beyond their traditional product core to secure growth through customer solutions designed around products and systems – is a trend](https://www.financedigest.com/mastering-the-2016-company-logo-design-trend.html "Mastering The 2016 Company Logo Design Trend") which has taken the manufacturing industry by storm. No company should turn every free offering into a [fee service, however, when handled with care, free to fee transitions can considerably boost](https://www.financedigest.com/recruiter-hays-boosted-by-record-net-fees-but-cautious-on-outlook.html "Recruiter Hays boosted by record net fees, but cautious on outlook") the top and bottom line.

There’s no doubt that the FS [sector is entering a period of drastic transformation](https://www.financedigest.com/how-data-governance-as-a-service-can-transform-the-financial-sector.html "How Data Governance-as-a-Service can transform the financial sector"). Digitally-powered services, and the data that they provide, are shaking up the industry and opening the door for organisations to offer clients more than just traditional products, as well as ditch the traditional freemium model. Subscription [services could enable banks](https://www.financedigest.com/axion-swiss-bank-and-avaloq-sign-long-term-contract-for-bpo-services.html "Axion Swiss Bank and Avaloq sign long-term contract for BPO services") operating in this landscape to capitalise on APIs, improve their services and get once- in-a-lifetime opportunity to turn data into pounds.


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