2.3.6. Open Banking (OB): APIs and Fidor Bank

OB is a newly emerging and rapidly developing area in financial systems (Open banking homepage 2018). The focus is on sharing data using the Open Application Programming Interfaces (Apiacademy homepage 2018). Applications that collect banking data from different institutions through API (application program interface) and present them on a single platform can be developed. APIs or application program interfaces are sets of rules that functions (applications) that can follow to communicate with each other and act as an interface between different applications. In addition to other benefits and advantages, APIs also save on costs; APIs can be used to implement app data from one app to another on a platform or service in a relatively inexpensive and simple way. The technology also adds value to the services provided. These applications can be developed by the in-house software developers as well as by the developers from outside of the organization (Kandırmaz and Tiryaki 2018). Customers can make better decisions by monitoring all their financial information in a single application (Figure 10).

**Figure 10.** The structure of open banking (OB). Source: (Kandırmaz and Tiryaki 2018).

OB has enabled the organizations of Industry 4.0 to disclose data, algorithms, and processes through application programming interfaces and to generate new revenue streams. AnOB model also presents new opportunities for product creation and distribution (Figure 11). In the approach of Industry 4.0, the banking industry has made major changes by involving a large number of partners who are able to incorporate themselves into the product development process. In this new approach, the importance of APIs is emphasized.

Fidor Bank, given its relatively long focus on providing APIs, has significant experience developing revenue streams around API-based businesses. Figure 12 shows the benefits of implementing banks APIs. While the bank often earns its income through the community-banking model, net interest income, fees, and commissions, about one-third of its revenue comes from activities that provide open APIs and white-label (a product or service that is manufactured by one company but re-marketed by another company, as if it were made by a second company) solutions. Fidor Bank is growing as much as its white-label partnerships, the revenue generated by shared revenue streams will grow, and partners will expand their businesses.

**Figure 11.** The role of application programming interfaces (APIs) in Industry 4.0. Source: Own contribution of the authors.

**Figure 12.** Benefits of implementing banks' APIs. Source: Capgemini (2017b) Retail Banking Executive Interview Survey, Capgemini Global Financial Service.

OB and BB are both on the path to fourth-generation banking development. The difference is that having open APIs, in particular, enables banks to collect operational data from a variety of sources, including customer buying habits, financial requirements, and risk appetite. Therefore, banks can offer products and services to customers with different tools and channels. However, banks also need to provide personalized services and products to different audiences through different channels. To this end, banks will work with FinTech to design a variety of products from platforms and tools, which will greatly improve product distribution. Therefore, in BB, by maximizing the potential of information and communication technology to customers without visiting the branch, through customer distribution and the supply of products and services with the same platforms and tools, customer satisfaction increases.
