Banks | AI | API | BaaP-A Match Made in Heaven?

I have been asked by a number of financial services companies, big banks and Fintechs where do I see AI, Open APIs and BaaP playing a role as we embark on 2020. Funny thing, my position hasn’t changed from when I posted this slide on LinkedIn over a year ago. Now, the not so funny thing is most of these FIs haven’t implemented an AI plan yet or are struggling at showing some type of ROI.

So with that said, lets brush over some of these with some examples and references from other thought leaders in the space.

Blockchain plays an important role in removing the friction for certain tasks while maintaining a trusted and auditable trail. Two great uses that come to mind for the retail bank are account opening and cross-border transactions. At this stage most of us use technologies like Touch ID, facial recognition, and iris scanning. We know this creates an additional layer of security that is not disruptive for the customer and pretty much seamless. These can be used for the initial authentication or as part of the account opening process. Large money transfers as you know can pose a risk especially when it comes to fraud. Strong authentication as part of the blockchain really shows its strength here. 

For onboarding or account opening, blockchain-based technology enables customers to use a digital fingerprint, which, like an actual fingerprint, can be used as a unique identifier. It can be stored on a distributed ledger and referenced by any bank in the network. The owner of the digital fingerprint can use it to submit new account applications and prove her or his identity universally.

Payments could be made and settled in minutes via blockchain, rather than in days as with current systems. The distributed nature of blockchains would mean greater transparency and immutability (data recorded to blockchains cannot be altered). McKinsey estimates that blockchains applied to cross-border payments could save about $4 billion a year.

Blockchain and retail banking: Making the connection

Gamification is always a fun way to engage your customers while making them feel special. Gamification improves user engagement (remember all those time on site metrics and the probability of conversion) usually by setting up a reward system for accomplishing a number of tasks. Go Paperless! Clearly we see this more than often as a push by banks like Citibank, Chase, American Express and major telecoms likes Verizon and AT&T. I have personally saved $5/mo on my cable bill by doing this.

Why, then, is the push for paperless banking still so prevalent? Banks save gobs of money when customers opt to stop getting paper statements and other pieces of snail mail through the post office — by some estimates it can cost at least 75 cents to more than $2 per printed bank statement, but fewer than 40 percent of individuals who bank online choose to go all the way and get their statements electronically

Pulliam Weston

Nudge Theory is where the rubber meets the road for banks. Think about the enormous amount of data that is captured and stored on each individual customer. Are you proactive with your data analysis or reactive and find it is too late and your customer(s) have left you!

AI makes it possible for banks to deliver ‘nudges’ that are tailored to each person and delivered in the right context and time.

For example, Cognizant’s Intelligent Decisioning lets you “make the right choices at the right time. AI-driven decision support systems help businesses make better decisions faster.”

Open APIs and BaaPs (Bank as a Platform) have not been a big part of the banking modus operandi but then again, banks have not been historically good at interjecting themselves into the customer experience outside of their respective bank.

BBVA, Capital One, Citibank, Deutsche Bank, HSBC, and Wells Fargo all have some form of developer hub, portal, or exchange that enables third-party apps to access, integrate, and/or extract data about the bank’s customer base.

Forbes-Digital Platforms Are Eating Banking

I have to give props and a shout out to our team at e-Citi when 20 years ago we launched myciti at Citibank making aggregation work by “opening” up our bank’s backend and leveraging Yodlee’s technology. We were not only able to better serve our exisitng customers but were able to acquire new customers that had their non-Citibank accounts brought over.

The Bank as a Platform vision calls for the value chain of the financial services industry to be divided into Product, Process and Retailer. Banks should analyse what their greatest strengths are and in which areas – depending on the customer segment they want to target and active touch points. The remaining areas can be covered through partnerships with other providers of financial services, thus delivering a broad range of services that reflects the needs of each particular customer.

This transforms a bank into a platform, in this case for financial services. This is similar to the way other digital leaders have become the preferred platform for things like consumer goods, transport services or property lets.


When banks embrace BaaP then benefits in at least three categories start to come to fruition.

  • Stronger Customer Loyalty – when your customers are given a choice for what makes sense with regard to their needs. Not value being produced upstream by the banks and consumed downstream by the customers.
  • Revenue Acceleration – tap into larger networks for customer acquisition in addition to upselling your existing customers other services and products.
  • Creates an Agile Environment – open APIs create a flexible and agile service platform for the banks for future development and regulation requirements.