Why banks have the same “drivers” as Uber with APIs
Follow that car – loyalty program providers should take a page from Uber’s API strategy to change the loyalty point game. Here’s how.
I’ve heard many banking IT staff declare definitively “we’re not exposing an API to the public.”
I get it. It’s scary to create yet another point of entry, a potential vulnerability to the organization. Better to just lock it up tight. Throw away the key.
In fact, to maximize security, we should probably just turn off all the computers.
There was a bit of consternation over Uber’s latest valuation. There’s a simple explanation to the high valuation. It’s not about the market for taxi rides. It’s about the platform:
“It’s interesting to think of Uber as the new Amazon. Amazon is a platform company, not a books company (and arguably not a retailer).” – Benedict Evans on Twitter
There’s certainly risk in their ability to become a platform, just as there was to Amazon when they were “only” the world’s largest bookstore.
That risk was reduced by one step last week when Uber launched their API. I was surprised at how obvious it sounded, but more surprised when a number of apps on my phone updated to add Uber reservation functionality.
It was a very nice launch. Uber is now where I am: If I’m flying United, there’s Uber. If I’m making a reservation at OpenTable, there’s Uber.
That’s an API impacting channel distribution.
That’s also an API impacting brand power demonstrating the real power of the application economy.
The API is enabling the brand to reach and engage customers at the point of the customer journey when Uber can affect a behavior in their favor.
Uber isn’t waiting for the customer to remember to open the Uber app, they’re in the app the customer is using at the moment they need Uber’s service. It’s beautiful.
The key thing to remember is that someone will figure it out in financial services. If the banks don’t figure out how to create a financial services platform, someone else will.
The banks realize they’re competing with Silicon Valley and believe they’re ready – perhaps from a technical-chops perspective rather than a perspective-perspective. Banks are not yet thinking like software companies.
I simply don’t believe there’s no business justification for banks to avoid public APIs. Banks have the same drivers that Uber does. (Hah! Going to leave that pun there.) APIs are just a technology – just an interface implementation for integration.
Banks are already doing external integration. My favorite example is the ability to pay with Chase Rewards points while shopping at Amazon.
It’s so easy to imagine Benedict Evans’ quote above tweaked to explain my point as follows:
“It’s interesting to think of Chase as the new Amazon. Chase is a platform company, not a bank (and arguably not a financial services company).”
I can pay for my Amazon purchase with Chase rewards points. This has a clear business benefit, if I can be so crass as to summarize it simply:
Why have they limited this to Amazon? (Rhetorical question. I imagine it’s because the non-API integration strategy takes a lot of effort, and so doesn’t scale unless it’s with someone big like Amazon. Though I don’t know for certain.)
Imagine if everywhere you could book an Uber, you could pay with Chase Rewards points?
Interested in learning about innovative approaches to differentiating, extending reach and establishing trust in financial services using API’s and mobile technology? Join me on September 25 for the webinar “Adapting to Digital Change: Use API’s to Delight Customers and Win”.