At the third Open Payments Conference, experts in the banking sector facilitated a workshop with industry specialists on scaling Payments APIs.
Using an API Strategy Canvas, the leaders identified an API solution and workshopped its roll-out based on key considerations that included defining volume monetisation, regulatory compliance and scalability.
The five key considerations of a winning API banking strategy include:
1. Customer and economics
Know your customer—and your customer’s customer. A strong strategy covers the entire value chain, ensuring each component is ready to integrate an API. Are your customers prepared to adopt an API-based business model? Do you understand what they need to succeed?
After you have defined the role players in your value chain, identify how the regulation, compliance and risk management fit in. Create governance structures to support each link.
Lastly, it's not a win if no one is generating value and revenue. Define if your API is a Product, Service or Enablement solution and look for opportunities to generate revenue for each role player in the value chain.
2. API lifecycle
The lifecycle of an API includes publishing, onboarding, support, technical maintenance, and retirement.
Once published, your API must be stable and reliable. If there are doubts about its dependability, scaling shouldn’t be considered. In addition, a clear retirement strategy is just as important. If customers rely on the API, determine how to seamlessly communicate and close any gaps when it’s retired.
The middle stages—onboarding, support and maintenance—are fundamental for scalability. Ensure the onboarding process isn’t too lengthy or complex to avoid deterring users, offer additional technical support for clients that need it and carefully plan maintenance schedules to limit impact on performance.
3. IT Assets and Architecture
We can’t get technical without technology. Scalable IT assets and infrastructure adapt to change and can grow with innovation.
- Visualise your API by creating a front-end flow that mirrors what your consumer will experience
- Design your IT Stack to allow third parties to personalise the APIs. Leaving room for third parties to customise at the top level leads to greater scalability, enabling your API to serve more use cases, expand your reach, and grow your user base.
- Be clear about the standards that are guiding your API development. Which standards (e.g. OpenAPI, REST, GraphQL) are best for your solution?
4. Go-to-market strategy
A pilot launch strategy is recommended for the following reasons:
- A pilot provides a controlled way to gather feedback and fine-tune the API before a broader release.
- To scale, you need to be confident that the solution is technically secure and sound. Starting with a pilot programme can lower the risk of downtime in the live environment.
- Focused governance procedures can be developed and tested to support sustained growth as the API starts to scale.
The discoverability strategy will determine how your target audience - payment service providers, e-commerce merchants and retail consumers - find out about your product. These personas should already be derived from the value chain analysis. To scale, begin by developing a discoverability strategy for the personas that will give you the most reach first.
5. Regulation
As your API becomes integral to the payments ecosystem, expect increased regulatory scrutiny. Prepare in advance by ensuring your governance process, security measures, data privacy protocols and financial reporting are robust and well-documented.
To preempt any operational hurdles, you could consider bringing the regulator on the journey early on. Determine if there are plans to change the regulatory environment in the short and long term. Understand how changes in the environment will impact the solution and the steps you need to take now to adapt to those changes.
Are you ready to launch your next Payments API? Want to level-up your API strategy? Download the API Strategy Canvas to get started.
