National Australia Bank (NAB) opened its IT to its internal tech team and independent developers through a competition designed to help it access innovation.
The move reflects the recognition by banks that they are not equipped to innovate at the speed required in today’s finance sector.
Banks are so hamstrung by the need to maintain legacy systems that the time and money required to create innovative IT products and services to meet customer demand is limited.
NAB ran the event on 6-7 December 2014 in partnership with Amazon and Intel. Known as NAB iDAY, the event brought together team members, contractors and partners to compete to build products that benefit customers by using the bank's application programming interface (API).
“This sort of open collaborative thinking is helping to drive innovation across industries and will benefit customers in ways not yet imagined,” said Andrew Ridley, industry development manager at Intel ANZ.
The use of startups and specialist suppliers is rising in a finance sector traditionally focused on in-house IT development.
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NAB's initiative comes as the UK government calls for evidence about how open APIs could "enable financial technology companies to develop innovative systems to allow customers to make better comparisons between different banks and financial products".
Even the UK’s biggest banks are open to more collaboration with third parties when it comes to IT development.
Sumeet Chabria, CIO of HSBC Global Banking and Markets, told Computer Weekly recently that he is open to working with third parties for IT innovation. He said different ways to develop and implement non-core systems can be explored, whether through third-party suppliers, joint ventures with other institutions or working with smaller, innovative startup firms.
Meanwhile, Deutsche Bank recently set up a joint innovation venture with IBM, Microsoft and Indian IT services firm HCL Technologies to improve its digital credentials.
App stores for banks is another trend aimed at encouraging third parties to develop for banks. For example, French bank Credit Agricole has created an app store to provide banking apps to customers and get ideas from customers for new banking apps.
The Credit Agricole Store is a platform that puts developers in touch with the bank's customers. The customers can download any apps they want and make suggestions for new ones. The app store currently has 21 apps and received more than 100,000 visits in its first three months. Apps cover balance checking, fund transferring, as well as one to help visually impaired people use the online banking interface.
IT analyst Gartner said by 2016, 25% of the world’s largest banks will have launched an app store for customers to find digital services.