Subrato Bhattacharya, Senior Consultant, TCS BaNCS
Banking is changing at lightning speed. Banking-as-a-product is growing into Banking-as-a-Service and would soon graduate into Banking-as-a-Lifestyle. APIs are a key ingredient in this evolution.
APIs are no more a discussion topic for technology teams to interface between two systems. APIs are now driving businesses and helping business reimagine their business and operating models.
Citibank has processed over one billion API calls from outside Citi, since its launch in late 2017.
The rapidly developing business environment fuels this rapid rise in B2B API volumes, including supporting direct-to-consumer flows, new e-commerce models, the switch from batch to real-time, and the advance of Instant Payments.
APIs enable digitization, API solution enables digitalization to save costs, and API product enables digital transformation to create new business. New business use cases of Open finance, Embedded Finance, and Decentralised Finance would grow exponentially in the days to come.
API-as-a-Product now represents the interface to the value proposition of the business or a Value Proposition Interface (VPI).
Is API a product?
According to Wikipedia, “In marketing, a product is an object or system made available for consumer use; it is anything that is offered to a market to satisfy the desire or need of a customer.”
Clayton Christensen says in his theory of Jobs to Be Done, “People don’t simply buy products or services, they ‘hire’ them to make progress in specific circumstances.” We develop or consume an API to “get a job done”—to solve a problem or satisfy an unmet need.
An API Product is an API offering made available for consumer use that is offered to a target market to satisfy a customer’s needs.
Key stakeholders for API-as-a-Product
There are four primary groups of stakeholders for an API-as-a-Product: API providers, API customers, API consumers, and end-users.
- API providers build, expose, and operate APIs. They are the API Product sellers who have a value proposition for a target market.
- API customers decide to buy the use of an API. They are the Buyers of the Product, who are interested in the business value that the API brings on board.
- API consumers develop apps that use APIs. They are the Users of the Product, who need to ‘Get a Job Done’ and are interested in the product's functionality.
- End-users don’t use directly APIs. Instead, they use APIs indirectly via the app that is developed by the API consumer and provided by the API customer.
Banks should focus on a robust Product Management function for API-as-a-Product
Our world is divided into problems and solutions. As briefly mentioned above, problems are needs or difficulties, which a target market of customers have and which are answered with solutions. The problem space is about customers- buyers and users who have needs or difficulties, while the solution space is more about the development of products and technology to address the problem space. In simple terms, the need to integrate is the problem, while API is one solution.
The product management function deals with the problem space and the engineering function is focused on the solution space. Banks need to focus on building capabilities on both functions.
Product Management, an occupational domain, encompasses two broad disciplines. The product planning and the product marketing disciplines as articulated by Blackblot product management toolkit.
Product Planning is an ongoing process of identifying consumer requirements and define the product feature sets. In an API Product world, the developers are the consumers or users. An API Product Planner is immersed in consumer advocacy. Planning for features that ease the Developer Experience (DX) that satisfy the unmet needs or solve the problems of the developer. The product planner should understand the customer requirements for the product and take responsibility for translating them into product requirements and a roadmap of iterations. The product planner engages with the API Product Engineering teams or API engineers to curate, develop and release API products for the target market.
Product Marketing is all outbound activities aimed at generating product awareness, differentiation, and demand. An API Product Marketer presents the business value to the buyer of the API. “If you build it, they will come” simply does not work!
In some organizations, a Product Manager is a role that requires the skills of a Product Planner and a Product Marketer.
API-as-a-Product Engineering function and its Challenges
Engineering function for the APIs-as-a-Product business develops the APIs leveraging technologies such as REST, GraphQL, gRPC, etc. as products and technology solutions to address the problem space.
API Product offered to the market may be a single API or a pre-orchestrated package of multiple APIs to address the business need. API Product engineering also considers the needs around availability, security, reliability, scalability, and all related aspects of making this API product available “as-a-Service”
Given the business value proposition of API-as-a-Product, banks also need to re-work the technology spend priorities. Currently, the banks on average spend just five to ten cents of every dollar of tech spend on additional business value (as per a recent report by McKinsey–Unlocking the Banking Technology workforce). Hence, banks need to optimize the spending on run-the-bank, increase the coding/programmer workforce and consciously gain deep expertise on the API technologies.
In an increasingly competitive landscape, the risk of not doing so has become too high to ignore.
Leverage Your APIs Strategically
There are four main product management strategies for API programs.
- Offer Platforms: Offering API Products makes it possible to productize the IT systems as a platform upon which other businesses can build new applications on. Such ecosystem partners will be invested in its success. This makes the case of cross-business synergies across the development, sales, and marketing of the platform.
- Monetization of existing assets: An API is a force multiplier on the existing technology investments. By enabling rent-out or repurpose under-used resources, APIs can empower businesses to monetize assets that might otherwise have been sitting idle.
- Create Composable Enterprises: API consumers can compose a solution that suits their business requirements and workflows rather than adapting and limiting themselves to straight-jacketed business models.
- Unbundling The phrase “unbundling” means breaking something apart into its composite parts. The unbundling of the banking stack as reusable components is helping banks deliver Banking-as-a-Service.
Next Focus on “Time to Wow (TTW)”
An API Product build should adopt an outside-in approach — i.e., relying on customer needs and preferences to guide product strategy. A successful API product has an API provider who has the right understanding of customer behavior to drive adoption and guide ongoing development.
A key element to the TTW is to understand not just the problem to solve but also the time and work required to get to Wow!. Wow! moment means that the API consumer understands how to use the API. TTW is the time hurdle every API must cross in order to win over the consumer.
“Wow! is the moment…where your API consumer and API customer suddenly see the benefit they get from using the API product and say to themselves, ‘Wow! This is great!’”.
Disclaimer: Views or opinions represented in this blog are based on the author’s own research and do not represent TCS BaNCS.