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Platformable uses the 5 wins data model to analyse trends in open banking. This model was developed using insights into ecosystem and participation best practices, API industry knowledge, and from our experience working with banks, fintech, community groups and the API industry sector.

At Platformable, our analysts collect data monthly to track key industry trends in open banking and digital government. We developed a causal model to understand the intended benefits and goals expected from leveraging APIs. We identified key data sources and built a system that draws on a combination of structured and unstructured data collection techniques. We are now building relationships with key providers to extend our data model even further. We also read voraciously and regularly speak with industry stakeholders to dig into what the data is telling us. While comprehensive, we continue to grow our data model. This post looks at some of our key indicators and describes the data that is collected in our quarterly trends report.

For the past five years, Platformable has been collecting data on APIs, open banking and fintech. To date, we have used this data to inform key projects including the annual State of the Market report and the CGAP API Dashboard, produced for the World Bank’s Consultative Group to Assist the Poor. Each year, our unique dataset has grown. As the open banking and open finance sectors accelerate, we are opening access to the data through new products such as our quarterly trends reports and industry dashboards.

We use our 5 wins data model to describe the open banking environment.

Platformable's 5 Wins Data Model

Banks are moving towards exposing their data and functionalities through APIs because they believe it will create platform benefits:

Banks can partner with external stakeholders to widen their market reach and adapt their revenue streams to take advantage of a more complex digital environment.

But banks have been notoriously uncooperative in the past when building these ecosystems, or when focusing on customers. As traditional institutions, they have been slow to adapt to the digital needs of their customers. Their practices have often locked out low income and other marginalised consumers. They have been slow to support small and medium enterprises and startups.

While there are some key banks who seem determined to support their customers and provide a diverse range of digital products and services, there are still too many common examples of banks failing to support their customer base:

Open banking regulations

Many of these behaviours have become second nature to some banks because the sector has enjoyed a near monopoly of the market.

Governments in multiple regions around the globe are seeking to disrupt these cultures by introducing open banking regulations. These regulations often seek to allow new fintech businesses to enter the market. These new fintech startups can focus on creating a lively and meaningful customer experience for consumers. So far, this has helped them build trust from customers who felt trapped and disenfranchised by bank behaviour in the past. They also took a customer experience point of view to create more niche and targeted products that matched specific customer needs, instead of building generic products, as banks have often done.

Banking regulations have also sought to ensure new data and privacy rights are enshrined as financial services move to the digital realm. Regulators want to encourage greater consumer choice so customers (whether they be individuals, households, or businesses) can manage their finances and generate wealth by accessing a wider range of digital tools.

So overall, open banking is seeking to create key benefits:

  • Creating market entry opportunities for new fintech players
  • Facilitating more consumer choice and opportunities for wealth creation for banking customers
  • Leveraging technology to ensure greater security and privacy.

Open banking progress to date

Banks have been opening APIs now for about five years, although regulations in Europe and UK have only really mandated the requirement for open banking systems in the last eighteen months or so. Action before that time was often driven by leadership banks, like Capital One in the United States and BBVA in Europe, who realised that platform opportunities were the future. They began work early to diversify their business models and work with external partners to provide new banking products and services for customers.

Over the last year, open banking actions have increased considerably.

Platformable’s data collection shows that at the end of 2018, there were 64 banks with API platforms, and 395 API products being made available.

By the end of 2019, there were 197 banks with API platforms, releasing a combined total of 1434 API products. 72% of the top 50 banks by market cap had API platforms. (This is despite trends that show the highest rank market cap enterprises are traditionally slow movers and risk averse, as they seek to maintain their market share by avoiding anything new.)

At Platformable, we believe that APIs and ecosystems can allow any sector to expand the pie. There does not need to be any winners or losers. We do not need a ‘winner takes all’ mindset. The increased opportunities for participants in ecosystems can also act to raise all ships and encourage better corporate behaviour and more transparency.

Who should benefit from open banking?

All of this has influenced our 5 wins data model. Open banking should create benefits for all 5 stakeholders:

  1. Banks themselves
  2. Fintech
  3. Consumers
  4. The underserved
  5. The API industry

To realise these benefits, open banking systems require 4 enablers:

  • Regulation
  • Developer experience (DX)
  • Standards
  • Security

Our data model collects both structured and unstructured data to analyse progress towards creating the benefits for all stakeholders.

Structured Data Unstructured Data
Platformable monthly analyst data collection: we review websites and track key data points using a consistent methodology Regular interviews with key informants
Platformable annual typeform surveys, often conducted in partnership with APIdays Talkwalker alerts for identified keywords
Regulator databases: government authority databases of registered fintech Review of industry news and latest industry reports from Finextra, PAYPERS, and other sources
Data partners: providers who collect data on usage of banking APIs on various platforms. Review of available presentations from conferences such as APIdays

Key indicators in the 5 wins data model

While our data model currently has 67 indices and continues to grow, a few of the key data points are discussed below.

Banks icon

Banks

Key question:
Are banks able to transform their business models to take advantage of open banking and APIs?

Secondary questions:
  • What API products are banks opening?
  • Who are they partnering with?
  • What new revenue and transaction volume is being generated through APIs?

Data sources to answer these questions:

Structured Data Unstructured Data
Monthly analysis of banking platforms Key informant interviews and publications on revenue and transaction growth
Analysis of banks by type (retail, corporate) and by maturity (market cap, neo/challenger bank) Talkwalker alerts for identified keywords
Analysis of API products released by banks Use case examples and partnership experiences
Analysis of maturity of bank APIs (closed/open beta, production)
Fintech icon

Fintech

Key question:
Are fintech able to leverage open banking and APIs to enter new markets?

Secondary questions:
  • What products and services are fintech building?
  • What challenges do fintech face in partnering with banks?
  • What new revenue and transaction volume is being specifically being generated from using bank APIs?

Data sources to answer these questions:

Structured Data Unstructured Data
Monthly analysis of accredited fintech providers and their products Key informant interviews and publications on revenue and transaction growth
Tallies of bank partnerships and bank API usage Use case examples and partnership experiences
Documented challenges working with banks
Data on use of bank APIs
Fintech icon

Consumers

Key question:
Are citizens and SMEs able to generate new wealth creation by using products and services built with bank APIs?

Secondary questions:
  • Do consumers have more choice?
  • Do consumers have high levels of satisfaction from using bank API-enabled fintech?
  • Are consumers more financially resilient because of using bank API-enabled fintech?

Data sources to answer these questions:

Structured Data Unstructured Data
Number of apps and products available that use bank APIs Customer experience of using products and services that use bank APIs
Average fee payments and requirements for using these products and services Talkwalker alerts for identified keywords
Identified wealth generation experienced by customers Review of industry news and latest industry reports from Finextra, PAYPERS, and other sources
Data partners: providers who collect data on usage of banking APIs on various platforms. Review of available presentations from conferences such as APIdays
Underserved icon

Underserved

Key question:
Are financially excluded consumers able to generate new wealth creation by using products and services built with bank APIs?

Secondary questions:
  • Are financially excluded consumers able to gain access to new financial tools that use bank APIs?

Data sources to answer these questions:

Structured Data Unstructured Data
Number of available apps and products focused on reducing financial exclusion that use bank APIs Customer experience of using products and services that use bank APIs
Average fee payments and requirements for using products and services Ease of onboarding for financially excluded
Identified wealth generation experienced by customers Capacity to use fintech tools to facilitate entry into financial markets
API industry icon

API industry

Key question:
Is the API technology industry able to mature faster because of the industry participation by banks?

Secondary questions:
  • Are banks contributing to API maturity by contributing to open source technologies?
  • Are banks enabling industry stability by purchasing API tools and partnering with API tools providers?

Data sources to answer these questions:

Structured Data Unstructured Data
Number of API industry stakeholders with identified bank customers Challenges for API industry in selling to and supporting banking customers
Bank use of emergent technologies
Bank contribution to open source technologies
Levels of engagement by developers in a bank’s forums (Slack, Twitter, LinkedIn, etc)
Regulation icon

Enabler: Regulation

Key question:
Are regulatory environments enabling open banking?

Secondary questions:
  • What are the aims of open banking regulations?
  • What are the differences in implementation outcomes between regulations that specifically mention APIs and those that don’t?
  • What are the regulation breaches that are occurring?

Data sources to answer these questions:

Structured Data Unstructured Data
Global analysis of regulations and legislation on open banking Industry opinions and analysis of open banking regulatory actions and implementation progress
Regulator timelines and milestones Email newsletters and blog posts from regulators
DX Experience icon

Enabler: DX Experience

Key question:
How accessible and developer friendly are banking APIs?

Secondary questions:
  • Are banks using developer engagement best practices?
  • Is a quality developer experience from banks creating greater benefits for all stakeholders?

Data sources to answer these questions:

Structured Data Unstructured Data
Number of banks with developer portals and key developer engagement assets Blog posts by developers talking about consuming bank APIs
Number of developers participating in a bank's dedicated forums (Slack, Twitter, LinkedIn, forums) Mentions in available presentations from conferences such as APIdays
Number of downloads/likes/views of bank APIs on API catalogue and library tools

Standards icon

Enabler: Standards

Key question:
Are open banking standards being widely used?

Secondary questions:
  • What standards are banks adopting?
  • Do standards create benefits for all stakeholders?

Data sources to answer these questions:

Structured Data Unstructured Data
Number of banks using API specification standards Scalability of fintech because of bank API use of standards
Level of adoption of industry standards when creating bank APIs
Banks icon

Enabler: Security

Key question:
Is open banking secure?

Secondary questions:
  • How many data and security breaches are occurring due to poorly managed bank APIs?
  • Are banks selling customer data?
  • Is fraud an increased risk from open banking?

Data sources to answer these questions:

Structured Data Unstructured Data
Number of data and security breaches from open banking APIs Industry opinions and analysis of open banking security decisions
Level of consumer confidence in open banking Key informant interviews
Adoption of API-related security best practices and technologies by banks

While we have been collecting these data sources for some time, our upcoming quarterly trends report will be our first opportunity to organise the data into our 5 wins model. You can sign up for early access. Subscribe now and you will receive a free copy of our Q1 Trends report, to be released in May 2020.