siliconindia | | July 20199What is a Shared Economy? Shared Economy works on the prin-ciple of collaborative consumption and delivery of goods & services, and works between peer to peer. For instance, Uber drivers deliver-ing food orders, thereby utilising their excess capacity to create value for themselves.Traditionally, banks have always been the guardians of public money. But as more and more people become open to using non-banking organisa-tions to manage their money, banks will be forced to collaborate and work closely with fintechs and corporates to enhance value for themselves and their customers. For example, RBL Bank has collaborated with companies such as Zeta, MSwipe and Capital Float to offer a range of value-added services to customers. This model assumes an element of mutuality in business plans and execution. Similarly, unlocking value by us-ing data has become vital. As of to-day, there is still an element of data privacy that is not fully implemented and regulated. But that gap will likely be filled in the near future. The fact is, today, the industry at large under-stands the value of going from being `data rich' to `data insightful'. Data is of critical value as we get increas-ingly more digital. Here again, banks have a huge amount of data in the form of customer spends, transaction behavior, demographics, and so on. There are also public data elements available such as Aadhar, PAN data and so on. Banks can use this informa-tion for themselves and also to enable collaborations through data-enabled APIs. An example of the same could be with customer consent allowing for customer statement to be delivered to an NBFC over an API so that the NBFC is able to give instant credit. For the bank, in case it doesn't offer this product, it becomes an additional revenue stream.As digitization levers change with various entities, the enablement from the banking side will come out of inte-grated experiences. Unless banks are willing to open up APIs, companies trying to offer differentiated services to their customers will not succeed in doing so. Businesses have to be cost-effective, and the more the digitisa-tion and the tighter the integra-tions, the more will companies be able to manage their op-erational costs effectively and efficiently.The need for physical and digital is felt very strongly in our coun-try. APIs again have a great role to play in making this happen. For instance, RBL Bank offers AEPS transactions for its BC partners. While RBL Bank is not necessarily present at all points, the trans-action is integrated using APIs between the BC system and the bank's systems, thereby enabling transactions to happen for a customer of another bank, say SBI on the RBL Bank platform.Overall, opening up APIs means tapping new opportunities. The en-tire business model of banking can be turned on its head with the above approach, which allows for self-man-ufacturing and distribution as well as collaborations with the same infra-structure, thereby enabling multiple channels including partner channels to offer banking solutions. The focus of API Banking is to empower partners and customers to drive their business on their terms across processes and customer experi-ence. This requires banks to be will-ing to relinquish the power to control all banking transactions. They should be willing to work on making sure someone else who is designing the ex-perience and business process is able to create the best experience and pro-cess. This requires, first and foremost, a culture change along with a change in approach to designing products and applications. This means accepting a business model that is led more by revenue share, small cost-high volume and high-velocity pro-cessing, and less by pushing floats and transaction pricing done independently.Offering APIs as a plat-form pre-necessitates the need for an extremely stable and robust IT infra-structure. Systems have to be built for scale-in and scale-out on the ba-sis of partner business models. From a govern-ance perspective, banks have to create a plat-form that takes care of the regulatory aspects and fraud in a manner in which the partners feel safe to focus on their business and let the banks do what they do best ­ manage risks, send and receive money, lend and bor-row, and enable it all in a safe and compliant manner. In India, we are at the beginning of a journey, and there is much to achieve in API Banking services. We are unique because we have many APIs that have been built under a public utility umbrella commonly known as `The India Stack'. We have success-fully built a common identity, a sin-gle authentication model, and consent architecture. The recent launch of the government's UPI platform is another bold step in revolutionizing the pay-ment architecture. As banks also start participating in the API economy, the only reality is that the customer will stand to gain on all fronts. Sujatha Mohan
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