apidays LIVE Paris - Responding to the New Normal with APIs for Business, People and Society December 8, 9 & 10, 2020 Business model Innovation via open APIs: creating new growth opportunities for platforms & opening up new propositions for customers Jeremy Larsson, MD at GrowthSmart Consulting

1. Business Model Innovation via Open APIs:
new growth opportunities for platforms &
new propositions for customers
Jeremy Larsson, GrowthSmart Consulting
10th December 2020

2. Jeremy Larsson
Managing Director at GrowthSmart
Business Model Innovation in Financial Services via Open
APIs
December 10, 2020
• Mentor at 4 leading Global FinTech Accelerators
• UK GM and Director of Strategic Partnerships,
CurrencyFair
• Former roles include:
• Founder GM of Telegraph Financial Services
• Head of Product and Commercial, John Lewis Finance
• Global Head of Innovation, SME Banking, RBS Group
• Director of Strategy Consulting, AMS UK
• Keynote speaker and podcast panellist
• NED of 2 FinTechs

3. Scope for API-driven disruption & permanent change in Financial Services is enormous...
Source: GrowthSmart Consulting
Open
Banking 1.0:
ecosystem
creation
2017 - 2020 2021 - 2022 2023 - 2025 >2025
Value Chain Unbundling &
Specialisation
• Accessibility of data sources
• Rise of BaaS
• Pure play product marketplaces
– Consumer and B2B
• Nascent embedding
• Increasing transparency &
availability of products
© GrowthSmart Consulting Limited
Open
Banking 2.0:
pervasive
applications
Widespread customer &
business use and adoption
• Nascent personalisation
• Integration across key consumer
and business markets
• Meaningful BigTech entry
• Significant investment &
acquisition
• Radically new innovation
emerging: Propositions, Use
Cases and Marketplaces
Open
Banking 3.0:
customers
are in control
Horizontal consolidation &
new horizontal capabilities
• Seamless integration of
embedded APIs across most
B2C and B2B
• Wholesale consolidation
among Ecosystem
• Proposition personalisation
• True “Finance Decision
Optimisation”
The New
Normal
“Just the way Finance is”
• True “Customer Agency”
• Ubiquitous integration within
verticals & across verticals
• “Financial Life Management”
✓

4. Five “Tectonic Shifts” in the delivery of Financial Services arising from APIs
© GrowthSmart Consulting Limited
Source: GrowthSmart Consulting
Limitless Reach &
Access
• Entire transactional record & picture of consumers and businesses becomes accessible and can be consolidated
• Data sharing ease enables more opportunities for more products to more people and businesses
Ultra-Transparency
• Real-time, holistic, “Single Customer View” of an individual’s or business’s Financial Life
• Transparency of whole-of-market range across all financial products, from all providers
• Instantaneous Price and Product-feature comparison across product providers
Rebalancing
Consumer Power
• For the first time, customers will have the power to “pull” the right product / price / volume rather than be
“pushed” product
• “Agency” platforms will drive more power back into the hands of customers (e.g. autoswitch)
Embedded Finance
• Unbundling of the traditional Financial Services Value Chain hugely exacerbated by Open APIs
• That unbundling and Open APIs makes Embedded Finance – the ability of non-financial companies to offer
financial services directly to customers at the point of need - happen
Personalisation
• Matching of Product / Price / Volume combination to real-time financial health, facilitated by AI / ML
• In combination with new data sources (e.g. online footprint; social), products can be proactively formulated and
offered based on changing circumstances and life stages

5. API-driven unbundling of the Value Chain creates new Platform opportunities…
Banking as a Service (“BaaS”): an ecosystem comprised of Banking Platform Builders & Integrators; API Portals & Bridges;
Marketplace Builders; Payment Processing & Automation Platforms; and Finance Use Case Providers.
© GrowthSmart Consulting Limited
Source: 11FS

6. …that unbundling of the Value Chain also enables new Proposition opportunities
© GrowthSmart Consulting Limited
The abstracting of banking & insurance functionality – payments; debit / credit; insurance; investments - into technology to
enable any company to integrate any financial service into their offering and deliver it directly to customers will give rise to
new, on demand and relevant proposition opportunities…
Source: 11FS; GrowthSmart Consulting

7. Banks, Wealth, Payments & Insurers
Non-Financial Brands
Digital
Challengers
Traditional
Incumbents
© GrowthSmart Consulting Limited
Strategic Positioning: How are businesses competing on Open APIs & Embedded Finance
Sources: GrowthSmart Consulting
CX catch-up & B/S utilisation Finance Marketplace & Data Play
Seamless CX & Rise of the Super AppSuperior CX & Loyalty Play

8. A snapshot of Platform opportunities: Banking-as-a-Service ecosystem in the UK
© GrowthSmart Consulting Limited
BANKING PLATFORM
BUILDERS / INTEGRATORS
FINANCE USE
CASE / FINANCE
DATA PROVIDERS
MARKETPLACE
BUILDERS
API PORTALS
Sources: GrowthSmart Consulting Limited
PAYMENT
PROCESSING
PLATFORMS

9. New Customer Propositions driven by Open APIs and Embedded Finance
© GrowthSmart Consulting Limited
Source: GrowthSmart Consulting
• Travel (B2C): Instant travel cover when booking a flight – or just before take off!
• Retail (B2C): Flexible finance at the point of sale
• Transport (B2B & B2C): On demand motor insurance before freight delivery, car hire or car journey
• Social / Peer-to-peer (B2C): Fuss-free payments to anyone in your network
• Ride-hailing (B2C & B2B): Payment embedded into app. Driver insurance on demand per trip.
• Pay Day Advances (B2B2C): Salary finance immediately available at point of need
• Mortgages (B2B2C): Mortgage application & offer within home buying app

10. Key opportunity areas: Untapped and under-exploited Vertical markets and Horizontals
© GrowthSmart Consulting Limited
Source: GrowthSmart Consulting
Verticals
(Under-exploited and untapped)
Horizontals
(New and enhancing capabilities)
• Trade & Logistics
• Health and Wellness
• Longevity & cross-generational
• Media / Gaming
• Manufacturing & Supply-Chain
• Energy
• Mobility / Transport
• Education
• Construction & Real Estate
• Urban Planning
• Finance Decision Optimisation
• Proposition Personalisation
• Customer Agency
• “Next Best Action”
• “Financial Life Management”

11. Open API-enabled Embedded Finance: an almost limitless reach
© GrowthSmart Consulting Limited
Source: Saison Capital

12. © GrowthSmart Consulting Limited
Strategy Dynamics: API-based business models will further disrupt Financial Services
• Huge opportunities for the most trusted brands and those with the most brand-stretch
• Customer expectations require more experience integration with finance across non-financial brands and industries
• Only the surface of API-driven use cases across different industries has been scratched
Incumbents
Big Tech
Banking-as-a-
Service
Non-financial
Brands
FinTechs
• Big Tech broadening role beyond eCommerce payments and Cloud processing (Predictive ML; BaaS; API bridges)
• Likely to be more aggressive shaping of the Open Banking and Embedded Finance ecosystem (Google has a US
banking licence; Amazon is applying for one)
• Consolidation between different components of BaaS ecosystem and strategic acquisitions enabling a stake at the
table (Railsbank; Plaid; OpenWrks)
• Share and scale to accrue to those with more connective & integrative capabilities (e.g. Banking Circle)
• Embedded Finance is the key priority for continued FinTech customer acquisition and revenue growth
• Competing on Open APIs and Embedded Finance provides the differential edge in BaaS / B2B2C distribution
• Partnerships, Proposition are the key USPs & capabilities
• Further unbundling of the value chain WILL HAPPEN
• Saxo Bank (Banking Circle) and BBVA have demonstrated a high growth, profitable, model to spin out BaaS
• Strategic bets need to be taken now for both defensive shoring and growth opportunities
• Buy / Build / Partner
Source: GrowthSmart Consulting

13. Is Embedded Finance the ultimate API-driven value opportunity?
0.5
2.1
0.2
2.6
0.1
3
0
1
2
3
4
5
6
7
8
9
2020 2030
Trillions $
Embedded Payments Embedded Lending Embedded Insurance
© GrowthSmart Consulting Limited
Sources: Oliver Wyman; McKinsey; Goldman Sachs; GrowthSmart
e.$7.7trn EF revs
opportunity by 2030
(compared with
$4trn revs of top 30
global banks &
insurers)

14. What propositions could you build from Open APIs and Embedded Finance: a near $8trn opportunity beckons
– across industries & geo-markets - where consumer & business need is not currently being served by EF
• What are your adjacent and relevant financial use cases and product markets?
• What incremental revenues can be made and how significant could those new streams be?
Customers & Differentiation: what are customers’ key financial needs at the point of need in the journey?
• What new customer audiences & segments can be reached and acquired?
• How will this become a key differentiator and make your business stand out
Capabilities: what do you need to create a new Open API and Embedded Finance business model?
Partnerships: More than ever, this strategic competency will distinguish the winners in this ecosystem
Innovation: How can you create truly new business models & propositions which leverage a customer’s
transaction data & digital footprint to ultra-personalise products / price / volume by life stage and channel
Competitive Strategy: What will lower barriers to entry for offering Finance products have as an impact on your
business – negative and positive? How can you grow and defend against new threats?
© GrowthSmart Consulting Limited
Strategic Questions: What’s your innovation opportunity?
Source: GrowthSmart Consulting

15. Jeremy Larsson
Managing Director at
GrowthSmart
jeremylarsson@gmail.com
+44 (0) 7838 126821
Business Model Innovation via Open APIs:
new growth opportunities for platforms &
new propositions for customers
December 10 2020