Why are API’s relevant / important to the mortgage industry?
Jobs to be done
I think it’s useful to look at the world through the lens of jobs to be done (read ‘Jobs to be Done: Theory to Practice’ and ‘Competing Against Luck’). The classic, simple example of a job to be done is illustrated with people who buy a drill. They don’t actually want a drill, they want a hole in the wall.
Equally simple, when it comes to mortgages, customers don’t want a mortgage. They want to buy a home.
Hold that thought.
Briefly, ‘transformation’ implies a starting point and an ending point. ‘Digital’… well, we’ve been digital for a long time now. We’ve all been banking online for over 15 years. So, the ‘digital’ piece of ‘digital transformation’ can’t be what’s interesting.
When we think about how digital banking started, even digital mortgages, it was about access. Access to the bank’s mortgage process. Instead going into a branch, you could go online. You could either download paperwork, or even start the application process online. Instead of talking to someone, you could get email updates and interact digitally.
So ‘access’ is the starting point.
Where are we now? Well, the job to be done of buying a home, shows us that it’s about ‘experience’. (Again, this is the brief version, see this article for more.)
Why does my bank need to ask me about my income, they should know it? They know my spending patterns. They know how often I’ve missed a payment on a credit card. Why are they asking me? They’re asking, because that’s the “process”. Fill out the form with your information, only maybe now it’s a digitally enhanced form of sorts.
The process hasn’t changed, and neither has the experience.
Think about what computing was like when we first went online. If you wanted to buy a house, you’d go look at houses, then go back to your computer when you got home where your bank was just a click away.
Things have changed. The computer is in your pocket. You don’t go to it, and therefore you don’t go to the service provider. It, and it’s services have to come to you in a much richer way than the desktop could every provide (with cameras, location, notifications, etc).
When you’re walking by a home, maybe you could ask a bot — can I afford this? It knows your location, maybe even where you’re looking, and says “Yes,” or “No,” or “Probably, if you cut out that $5 coffee you drink every day.”
When you’re looking at a real-estate app, and there are many, the mortgage company wants to be embedded in the customer journey of that app… not an afterthought or an add-on. Why can’t an app just show you the homes you can afford (and maybe one price range higher or lower, or something)? It’ll save you time, and the mortgage company is a partner in your home buying process, not a part of the necessary paperwork.
That’s the opportunity presented by the experience economy.
It’s a problem of scale
Let me share a story of something that we did in healthcare, but is highly relevant to any industry where experience matters.
Here at CA we created a healthcare developer platform (you can request your own login). Using an open source patient record system, we expose the entire set of FHIR APIs (an industry-pseudostandard) via a developer portal. Anyone can request a login, and create a solution using that patient record data (which is not private by any stretch and is meant only for illustration of the power of a vertical portal).
Along came a partner. This partner has great healthcare API experience. They wanted to create a healthcare app to showcase that experience. They built it on our platform. The partner won, because they didn’t have to build or manage the back-end infrastructure, yet they have full access. CA won because we have a great mobile app to demonstrate the power of our platform, and it didn’t cost us a penny to create it.
In an experience economy, you’re going to want to know your customer (and you probably do already because of KYC regulations) and then deliver highly optimized experiences for those customers.
Note the plural in that last sentence.
You’re going to have to deliver a lot of experiences. But, with an API platform you may not have to create every one of them.
That’s why APIs are important.
Build security and compliance into the platform. Security officers retain total control, and developers have more flexibility to focus on the software they’re creating. Besides, most developers are not security experts anyways, so it’s better for everyone if they don’t have to have security ownership embedded into there app development roles.
Equally important is building security and compliance into that platform, and that’s where CA comes in. What appears simple — creating a REST/JSON API for anyone to develop against and sure, you can put security into the API easily enough. But for that to scale, you want security and governance in the infrastructure so you’re not dependent on the capability of the developer. Because in the end you own the risks even though someone else does the development.
It’s a huge and important opportunity, as Forrester shows that companies that can excel at experience will grow, others will not.
McKinsey looks at it a different way. 80% of executives believe their business model is at risk, but only 6% are satisfied with innovation performance. It’s because they’re trying to do it all themselves instead of letting go of the things that don’t matter. Security, governance, developer control… those matter. Writing the code, designing an app and an experience, they don’t matter as much.
— Alex Osterwalder (@AlexOsterwalder) January 18, 2017
It’s funny because that’s exactly what CA enables. Innovation with software. (Though, admittedly, not everyone tells the story that I do.)
For more reading, have a look at these articles: