Platform Based Banking


Based on: Tiwana, A., Konsynski, B., Bush, A.A., (2010) Research Commentary Platform Evolution: Coevolution of Platform Architecture, Governance, and Environmental Dynamics. Information Systems Research 21(4):675-687.

In the old days there was a clear distinction between customers and companies, but now this line is fading. Companies made products which customers bought and both parties relied on the expertise of the designers. It was a rather simple world that worked well for quite a while. But due to the internet everything changed. Suddenly companies were able to connect to customers in ways that were never thought would be possible. Control shifted from the companies to the customers and another group of ‘customers’ was born; developers. In order for companies to stay relevant, they needed to incorporate these new ‘customers’ in their business proces. By creating a platform ecosystem, companies are able to do this. The economy is changing towards a platform-based economy, where (two-sided) network effects are the main drivers.

Tiwana et al. (2010), explain a platform ecosystem as the extensible codebase of a software based system that provides core functionality shared by apps that interoperate with it, and interfaces through which they interoperate.  Screen Shot 2015-03-12 at 22.02.21

The modules are the apps running on the platform. A module is an add-on software subsystem that connects to the platform to add functionality to it (Sanchez & Mahoney, 1996). The lines called ‘Interfaces’ seen in this figure can be considered to be APIs. API is an abbreviation for Application Programming Interface. Software developers acces APIs as interfaces for code libraries, frameworks or sources of data, to free themselves from low-level programming tasks (Dagenais & Robillard, 2008). These interfaces I think are the gateway to the future. They allow companies to share data in a standardised way, on which developers can build their own ‘new’ products. Developers co-create value for the company. Entire businesses are build this way. Think of Netflix, Twitter and Google Maps.

I think the banking industrie will be the next industrie to gain from using APIs. When banks allow developers to co-create value, completely new services will emerge that banks have never thought of. In recent history Information Technology applications have created a lot of new possibilities for banks, for example the ATM (Automated Teller Machine), which led to a decrease in costs and an increase in added value for customers (Kamel, 2005). I believe APIs can do the same, if not more, to benefit the banking industrie.

References:

Dagenais, B., Robillard, M.P., (2009). Semdiff: analysis and recommendation support for API evolution. In: Proceedings of the International Conference on Software Engineering (ICSE), IEEE, pp. 599–602.

Kamel, S. (2005). The use of information technology to transform the banking sector in developing nations. Information Technology for Development, 11:4, 305-312

Sanchez, R., Mahoney, J., (1996). Modularity, flexibility, and knowledge management in product organization and design. Strategic Management. J. 17 (1), 63–76.

Tiwana, A., Konsynski, B., Bush, A.A., (2010) Research Commentary Platform Evolution: Coevolution of Platform Architecture, Governance, and Environmental Dynamics. Information Systems Research 21(4):675-687. 

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