Issue link: https://recursos.axway.com/i/1321495
27 Open Banking APIs State of the Market Report 2020 Open APIs also have a direct revenue impact for both banks and fintech: \ For banks, open bank APIs can bring them new accounts which then go on to use other bank products or pay bank account- keeping fees. Several banks have indicated that fintech building investment and trading products are required under local laws to be connected to a bank account. Using open banking APIs, fintech have referred large numbers of customers to a bank to create a bank account as part of the onboarding process of using the investment trading app. \ In some regions, banks are pricing the transaction processing of payments made via API. For each payment transfer initiated, the bank receives a processing fee based on the transaction volume. This creates a new direct revenue stream for banks. \ For fintech, using open bank APIs allows them to enter a market and start offering a financial services product. While some fintech are built directly without using open bank APIs, open banking has enabled new fintech to enter the market and create commercial value propositions. In many cases, the business model for these fintech is still being tested. THE VIABILITY OF FINTECH For new fintech entrants to be viable, they need to have business models that will allow them to grow. At present, the trend of business models used by fintech are skewed towards payment provision (a commission-based model), in which fintech can charge a payment processing fee. Globally, this is a mostly commoditized pricing model in which all providers charge using a flag fall and volume-based pricing structure. The large number of unknown business models (28% of all fintech business models), reflects the dominant venture capital influence in which many fintech leveraging open banking APIs are primarily focused on building a user base first. After demonstrating product- market fit through consumer traction, these fintech hope to understand where the value is truly being generated from their products and will HOW BANKS BENEFIT FROM FINTECH • Better customer experience • New account creation • Transaction processing fees • Data on customer demand HOW FINTECH BENEFIT FROM OPEN BANK APIs • Enter the market and become viable businesses HOW CUSTOMERS BENEFIT FROM THE FINTECH USING OPEN BANK APIs • Improved savings and money management • Greater choice • Seamless experiences