Digital Ecosystems: Dynamic APIs drive corporate change
DBS has become a global trendsetter with the world’s largest banking API developer platform, and is breaking new ground with adopting APIs in digital ecosystems with corporates.
In the past, a bank’s business model was based on a structure of branches, datacentres, credit cards and loan approval processes. For businesses, digitalisation has commonly been about using less paper, and enhancing the speed and quality of connectivity, and office tools.
Today, leading banks are leveraging business ecosystems to drive digital customer journeys with capabilities, such as virtual wallets and real-time settlement infrastructures, and this is resulting in a positive effect on its industry partners and clients. Open architecture digital infrastructures such as cloud computing, real-time payment mechanisms and connectivity via smartphones have changed the financial services landscape materially.
What is a digital ecosystem?
Digital ecosystems connect business partners tighter than before to facilitate an exchange of information with the use of application programming interfaces (APIs), create solutions that didn’t exist before, and enable the scalability of solutions.
They offer a common connected environment where stakeholders - clients, industry partners, market infrastructures, other industry segments and even competitors – can engage and interact with each other. These ecosystems, often interoperable, are fuelled by emerging digital technology such as cloud-computing, blockchain and IoT and they are driving the creation of new solutions as well as causing disruption across many industries.
According to Raof Latiff, Group Head of Digital for Institutional Banking Group, and Group Head of Product Management for Global Transaction Services at DBS, digital ecosystems are now an essential part of the financial firmament allowing various stakeholders to connect and collaborate in ways that are reshaping traditional banking and business models.
“While we have invested in a shift towards an ecosystem approach for our technology architecture and processes at DBS, this approach is also heavily adopted in the way we embed our services into the clients’ ecosystems.
Ecosystems defines new business models that connect banks, buyers and sellers automatically, and facilitate transactions enabled by APIs. This creates new solutions through the integration of social media and technology, and provides intelligence through data, resulting in value creation for all parties,” Latiff said.
Two examples of value creation include Tencent’s WeChat app which gained market dominance via its combination of functions, from retail payments to social chit chat. The wide reach of share-ride company Grab is also another example of how digital ecosystems interact on a number of levels.
The evolution of collaborative platforms like Grab and WeChat is likely to further accelerate as businesses increasingly recognise the synergy and benefits it brings by providing end consumers with more choices and better user experiences, and while presenting service providers with new business opportunities.
No longer are consumers relegated to the far end of an increasingly complex production arrangement. Technological advancements have enabled the collection and aggregation of data, providing insights into consumer needs and behavioural patterns. Technology also facilitates the connectivity for the end-to-end value chain, supporting real-time transactions and information flows.
For example, in the automotive industry, blockchain technology allows the interconnectivity of the various players within the ecosystem – from the producers of car components and large frame manufacturers, to the car dealers, and end consumers - facilitating data and financial flows, and providing traceability and provenance across the entire business chain.
In some cases, ecosystems of producers empowered by newly accessible and affordable technologies, are actually leading the evolution of innovative, scalable solutions. In the commodities space, companies are
using technology in their supply chains to improve efficiency by tracking consumption of resources such as water, commodities and chemicals, as well as in developing end-to-end traceability for their entire supply chain.
Furthermore, APIs are leading a whole generation of technology that enables real-time connectivity and data flows through market infrastructures.
In the past, APIs were often used as simple tools for developers and applied internally. Today, companies are leveraging them externally. For example, in the insurance sector , DBS partnered with MSIG Insurance in November 2017 to redefine their customers travel insurance claims experience using DBS IDEAL Rapid, our API solution. As a result, travel claims settlement times were reduced by four days. Digital processing also helped reduce cheque payments. Earlier this year, DBS also partnered other insurance providers such as AIG and FWD to roll out electronic claims payment solutions through the use of DBS IDEAL RAPID.
Shaping ecosystems of the future
DBS is a leader in adopting digital solutions, collaborating with members of our ecosystem including governments, industry and technology partners as well as clients, to make banking simpler and invisible for customers.
In 2017, DBS launched the world’s largest banking API developer platform with 155 APIs across more than 20 categories. The move marked a landmark collaboration between DBS and Xero, a cloud-based accounting software company, for an API-driven bank feed integration to enable secure and automated daily flows of transaction data into Xero’s accounting platform.
Latiff said the bank is making great strides in delivering first-of-its-kind digital innovation to corporates.
“API-led connectivity enables the creation of solutions that never existed before, and the use of APIs drives collaboration and mutual benefits for the broader community. APIs are also critical building blocks for digital ecosystems, and we currently have engagements with our clients in ecosystems for ecommerce, agriculture, and automotive industries, and we expect this momentum to accelerate further in the coming year.”
DBS also plays a key role in the digitalisation of trade finance, with its involvement in various national trade platform initiatives in Singapore and Hong Kong.
“Using blockchain technology in cross-border trade finance is set to transform and disrupt legacy processes within the banking industry. We are delighted to be pioneering this ecosystem development along with leading industry partners and regulators, and shaping the landscape for the future,” Latiff said.
(This article was first published in The Corporate Treasurer in July 2018.)