With the relationship between traditional banking institutions and FinTech start-ups increasingly characterised by a climate of unbridled rivalry over the past few years, the possibility of an ‘entente’ between the two factions has seemed an unlikely outcome. Yet, as the depth and range of API-based solutions continues to open new possibilities across the financial sector, so too has the opportunity for wider cooperation begun to emerge, with mainstream banks offering FinTech companies the chance to work with legacy systems (as well as providing funding resources and regulatory know-how), and FinTech providers offering banks the chance to benefit from ‘top-notch’ technological expertise and an ability to upgrade existing or outmoded services to meet the needs and expectations of an increasingly techno-savvy customer base (particularly given the advent of open banking and the growing influence of financial apps in the UK).
In October 2017, for example, HSBC announced that it had partnered with the UK-based FinTech company, Bud, in order to trial a new app allowing customers to access account information from across a range of providers, while a collective of leading UK banks (including RBS, Barclays, Lloyds, Santander and HSBC) have recently collaborated with a number of notable FinTech firms in order to establish a set of guidelines that are designed to further future alliances and to allow for the development of API solutions which will ultimately benefit the financial services industry at large.
Many experts believe that initiatives such as this will ultimately prove essential in terms of promoting a system of interoperability between financial institutions and FinTech providers (so as to allow for the unrestricted sharing of information between their respective systems) and to fuel the development of a new wave of mobile financial services and applications, while others cite the ability of Uber drivers to engage with API-driven services such as Google Maps and to locate their passengers as a potential template for future banking practices – a seamless operation. Indeed, achieving a measure of interoperability will allow banks who are currently struggling to address the glaring deficiencies of existing operational systems and to keep pace with the evolving demands of their customers to offer a range of services which place the individual consumer at the forefront, while also emphasising simplicity, transparency, inclusivity and speed of use – a game changing proposition. Which is why APIs will provide the key to greater collaboration between the FinTechs and banks over the coming months, so stay tuned.
