Change isn’t exactly unfamiliar territory for most community banks. If any institution is used to weathering change (housing crisis of 2009, anyone?), it’s banks. Then banks experienced the impacts of COVID-19.
When COVID hit, the Paycheck Protection Program (PPP) launched soon after. Lockdowns changed customer behavior patterns and PPP loans needed processing. To continue meeting client needs, many banks accelerated their 2025 digital transformation plans. This meant that what was originally a sixty-plus-month plan now had to be accomplished in a matter of weeks. Banks had to respond with their own innovation, and fast.
A Chase survey from October 2021 revealed that seventy-three percent of consumers use mobile banking apps at least once weekly. That number reflects an eight percent usage increase over the previous year. Now, consumers not only use digital banking, they expect their banking experience to be as quick, seamless, and as personalized as Netflix.
But what happens if you aren’t one of the big banks? What if you don’t have the team or the budget to overhaul your core banking provider? Does that mean you’re left in the cold?
Not at all. That’s what Open Banking APIs are for.
Open Banking at-a-Glance
Open banking is a way of allowing various financial service providers to share personal and financial data between themselves, assuming the customer has given them permission to do so. Application Programming Interfaces (APIs) are the most cost-effective way to make sharing happen.
Here’s a shortlist of real-world examples of how Open Banking APIs have been used to connect bank data with third-party services to create consumer-focused banking experiences:
Investment apps + Bank account: To use the Robinhood investment app, users have to connect the app with their bank account. Plaid’s APIs connect the user’s bank with Robinhood for a seamless and smooth experience.
Bank + AI chatbots: Bank of America launched an AI-driven chatbot to help with basic customer support questions and improve customer satisfaction. To do this, the bank needed to provide the AI with access to account information within the bank database.
Accounting + bank: With Citi’s authentication and technology and accounts APIs, Intuit customers can authorize apps like Mint and Quickbooks to access their balances, due dates, and translation history.
Bank + subscription management: Subaio allows users to integrate the subscription management service into their bank’s digital products from mobile to desktop. Subaio’s API-based setup provides users with an overview of their subscriptions and the ability to cancel subscriptions and receive change notifications.
Unified banking: Spiir customers connect all their bank accounts through its open banking AP. Spiir analyzes and categorizes old transactions and new expenses and wraps it all up into a single, comprehensive view of their financial picture.
Why should you have an open banking API strategy?
In a nutshell, because Open Banking equals opportunity. If opportunities are a castle, Open Banking APIs are the keys that unlock its gates.
Opportunity to grow and add revenue streams. Open APIs can build new, customer-focused solutions driven by customer demands. With access to customer data that open banking unlocks, community banks can customize rewards programs, develop banking-as-a-service offerings, and offer tailored e-commerce capabilities.
Opportunity to increase customer lifetime value by creating a better user experience. Slow, redundant processes can kill customer satisfaction. Open APIs can help streamline clunky processes to improve response times and customer experience. Combined with the ability to innovate fresh solutions, Open APIs help keep consumers happier, longer.
Opportunity to stay ahead of the competition (or catch up quickly). Few community banks have the budget or in-house staff to build a new product or service from scratch. Open APIs allow them to easily shop the marketplace of fintech solutions, knowing they can quickly integrate the latest and greatest products.
Open Banking APIs are the critical ingredient to unlocking your bank’s competitive potential in today’s world. So, which of these opportunities would benefit your bank the most? When you’re ready to transform your business, one thing is certain – having a good technology partner helps (we know where you can find one of those).
If you need a good starting place, take a look at our ebook, 5 Keys for a Successful API strategy.