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This year we will witness many changes in the world of technology and banking: banks will open to third parties as never before, the use of APIs in financial institutions will grow exponentially, and software developers will see an environment that will facilitate the creation of apps that before they could not even imagine.
These are some of the techno-financial trends we can expect in this 2015.
This should not come as a surprise. The use of mobiles has soared and consumers increasingly use their devices (mainly smartphones and tablets) to access financial websites and apps, relegating visits to branches to a second level.
Banks have responded reasonably well to the demand, but there is still room for improvement: lighter apps (but robust and safe), better user experience, customizable and real-time content (versus static content), etc.
Within this current, APIs are going to play a decisive role in the strategies of banks, as they help to make their services more customer-oriented and more easily adapted to each particular situation. As the IT research company Gartner rightly says: “Banks should be banking on APIs and apps, not applications.”
The Internet of Things (IoT) is not a new concept; it is an idea that emerged in 1999 which includes all the devices connected to the Internet that are able to communicate with other smart devices also connected to the World Wide Web.
Many industries have already made the leap and are investing in technology related to the Internet of Things, and the rise of wearables will only accentuate this trend. However, the banking industry has made so far just some timid attempts. This will be the year in which we will see changes in that regard.
With banks and financial institutions enabling APIs, developers will be able to use several of these interfaces to create applications that integrate information from different sources, thus addressing the whole environment of users.
Therefore, we might be able to see apps that manage family finances and consider real-time events even before the user has to worry about them. For example: the check engine light starts flashing on your car and an app automatically starts to analyze the code, calculating how much it would cost to repair the problem and adjusting your budget to accommodate that expense. Then, you receive an alert on your mobile suggesting these changes, or proposing methods of financing with the best interest rates available at your bank and buttons that facilitate the application process.
We should keep in mind that the Internet of Things is not going to be built in one day, and we may still not see examples like the one just mentioned (although they are closer than what some people think). It will take some time to expand and improve its performance, but it will have an impact as great as the Internet had (and has). In 2015 we will see how it takes shape.
Some banks like BBVA, Citi or Crédit Agricole have been pioneers in the integration with third parties and external groups, and have been working with analysts and programmers for years, even though this has not been so far the general trend within the industry.
In 2015 we will see more banks jump on this bandwagon: the tendency to open and integrate with third parties will expand and consolidate through the financial environment. We can see this reflected in the increasing number of financial APIs available (the second-fastest growing category, only eclipsed by social networks) and the activity it generates (webinars, conferences, hackathons, etc.)
This opening and integration can be achieved through the use of APIs and open source made available to external groups, thereby promoting the growth and technological development of the industry attracting talent and professionals with skills and different ideas.
All this will translate into a rise of financial apps for phones and tablets, which will also have a double effect: on one hand users will have more variety to choose from, and on the other they may feel overwhelmed/ unsafe due to the large number of apps available.
One solution for this is that large banks launch their own app stores (according to Gartner, 25% of them will have one by 2016). In this regard we should highlight the initiative of Crédit Agricole, CAStore, where software developers can join to create and share banking apps.
Thus, financial applications will end up being available through the Apple or Android app stores and also through the own app stores of financial institutions. This will allow banks to give users more detailed information to their customers and to better control the apps using their APIs.
Many of these changes entail an extensive use of APIs, which currently implies a challenge for developers if we consider that until now many of the institutions with APIs have no unified criteria for them, being different from one company to another.
In the last quarter of 2014, the Open Data Institute and Fingleton Associates published a report that emphasized the importance of APIs in financial institutions and stressed that their possibilities and potential had not been fully explored. Based on these conclusions, the Chancellor of the Exchequer George Osborne issued a statement calling for an analysis of the use of APIs within financial environments and for the launch in early 2015 of a process of standardization of APIs in the British banking industry.
The United Kingdom is therefore trying to pioneer and lead the standardization of APIs in financial institutions, placing the country at the forefront of a movement that will spread to the rest of Europe and globally and that benefits both users and providers of financial services.
This standardization will facilitate the development of innovative financial applications by technology companies and will also help consumers, who will get new tools to compare products from different institutions or facilitate the movement of information between banks.
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