Uber revolutionized the car transportation business when it created a market capitalization of billions of dollars without owning cars or carrying any stock. Similarly, the open API economy has acted as a catalyst for non-traditional players to venture into the payments market and reshape the idea of how payments can work. Technology giants (like Google, Amazon and Facebook), retailers (like Tesco, Carrefour and Starbucks) and telecom operators (like Orange, Vodafone and T-Mobile) are increasingly encroaching on the payments value chain by offering competing financial services (e.g. payment wallets, tokenization, reporting and invoicing), all of which make use of open APIs. This encroachment is further enabling these players to augment their own customer data with payment information to expand their service offering and share of wallet with customers.
The next step of an open API economy is for financial institutions to become an open platform that fosters a wider ecosystem of third parties – like FinTech and retail partners. A true digital ecosystem is a massive collection of products, organizations and people that are aggregated on a digital platform. Effectively designed, these ecosystems create value for all parties involved. Financial institutions should embrace this inevitability as it benefits them as well, offering the independence to create better products and services as well as the ability to support the innovation that consumers demand.