Open API for Bank Apps: Can Credit Agricole's Model Work Here?

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When a bank wants some out-of-the box thinking, it might help to look outside the industry not only for ideas but also for the finished product.

That's what French bank Credit Agricole did when it launched the CAStore, an online marketplace that essentially crowdsources ideas for new banking applications from customers and gives developers the technological tools they would need to create apps that either fulfill the wish list or are based on ideas they've dreamed up themselves.

Introduced in January 2012, the financial application marketplace has proven to be something of a showpiece for what can happen when the banking industry reaches out to work with third parties on technology advancements.

"Applications designed by a banker look like what a banker can imagine," says Bernard Larriviere, director of innovation for Credit Agricole. "We needed to have the customer's point of view to ... make us think about another way of creating applications to meet customer needs."

Prior to opening the CAStore's virtual doors to developers, Larriviere says it previously took as long as "two years for a bank like ours to develop an application" due to bureaucratic holdups, security and compliance considerations and the conventional pace of innovation in banking. "The traditional way of development was very slow," he says.

That always was a weakness, of course, but the impact is more pronounced now.

In the mobile app era, "people have a 'there's an app for that' mentality and will look elsewhere if they can't find it through their bank," says Mark Schwanhausser, director of omnichannel financial services for Javelin Strategy & Research in Pleasanton, Calif. He says that consumers in the sought-after 25- to 34-year-old demographic are especially likely to have no problem going outside their banks to find what they want.

Solutions like CreditAgricole's could prove useful, and even necessary, if banks want to move beyond the one-size-fits-all approach of conventional services and actively engage more customers.

"One of the biggest challenges is the need to innovate faster than a dinosaur," Schwanhausser says. "Here comes a concept that says, 'There's a lot of innovation and innovators out there. How can we take advantage of it?'"

The CAStore uses an open API, or application programming interface, in which technology is shared freely with outside developers so that it can be integrated into new programs, without compromising compatibility.

Prior to launching the CAStore, CreditAgricole had elicited suggestions from consumers by hosting "procreation workshops," where it would put customers in a room for an hour to brainstorm ideas for new apps and services that would be useful to them, says Larriviere.

Now, customers and designers have offered even more in the way of practical and innovative ideas for financial applications. One application was designed to notify customers of account overdrafts. Another makes a game out of saving money; customers get an award that is displayed on their Facebook page when they hit their savings goal. "We would not have dreamed of the [savings game] application. It just wouldn't have come into our bankers' minds," Larriviere says.

The CAStore already has attracted more than 50 outside companies and individuals who develop applications at the site, often based on the suggestions of consumers, or of other banks. Customers post their ideas on the site—at one point this spring, there were more than 80 ideas posted. The developers (known as "Les Digiculteurs," or "digital farmers") are encouraged to contact customers who have posted ideas, so that they might participate in shaping the apps.

Many of the apps allow for just a narrow, but still important, function. "When a banker designs an application, it's usually very complete," says Larriviere. "But here, it's easy for customers to think about one specific need for us to match."

Developers creating the apps for the CAStore generally are independent firms with between 10 and 20 employees, although they run the gamut, from one- or two-person design shops all the way up to IBM, Larriviere says.

John Walter is director of operations for the French design firm Wassa, which has developed an app called "Whats-ThatLine." It lets customers mark bank transactions that they have questions about and allows them to share the information with their financial advisers or any other contact they choose. The sharing application, Walter says, "focuses on a very specific need. We did this because when you think about mobile usage, you don't always need huge dashboards full of numbers. Sometimes, you only want to check if everything is fine with your account."

Wassa also has created an app for other developers, a starter kit that, according to Walter, makes it even easier to build apps using the CAStore's open API.

Third-party developers never "see or know" any real customer data, Larriviere says. "They have no access to it."

But concerns over security and risk, especially in the wake of growing reports of mobile malware exploits, have been a primary barrier to wider adoption of open-API marketplaces in banking.

CreditAgricole reviews the apps available in the CAStore at least every two weeks to confirm they have no malicious code, Larriviere says. "Our regulators are as demanding as those in the United States," he says. "The system we have developed is very good for security in the eyes of our regulators."

In addition to the CAStore, Europe also is host to Tesobe's Open Bank Project, which is based in Berlin. The Open Bank Project, launched in May 2012, encourages using open APIs and developer kits for niche markets and new interfaces, in the hopes of lowering development costs and improving security.

But could the CAStore concept be replicated by U.S. banks?

Schwanhausser thinks so, and says he already can see elements of CreditAgricole's approach taking root with U.S. financial institutions.

USAA's new accounts view—which allows customers to aggregate outside accounts—points the way to a new approach of "widgetizing personal financial management" in a way that fits neatly with what outside application development offers, he says. And there's no overlooking PayPal, the online payments giant, which for several years has offered up a software development kit and API that allows third-party developers to create new apps.

Larriviere believes other banks will follow CreditAgricole's lead—or risk losing ground to outside parties that work entirely independently of banks. "If we don't have enough applications to match the customers' needs," he says, "they're going to find them outside the bank."

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