API Sandbox Is A Stepping Stone To Open Banking: YES BANK CDO Ritesh Pai

While public sector banks still enjoy a huge chunk of the banking market share in the country, private banks have turned to technologies such as artificial intelligence (AI), machine learning (ML), blockchain and IoT to create a competitive moat and stay relevant in the fintech world.

Among the many fintech models that are disrupting the financial industry, banking-as-a-service is being hailed as a key advantage for private banks working to infuse technology into their operations. But in the context of India, is banking-as-a-service a distant dream?

India’s leading private sector bank YES BANK is ready to challenge that notion. The first Indian bank to launch API banking, YES BANK is now taking APIs to the open banking system as a gateway to a banking-as-a-service model.

As YES BANK launched its API Sandbox for banking on November 6, Inc42 sat with the company’s chief digital officer Ritesh Pai to understand the company’s design thinking and banking in India.

Inc42: YES BANK has offered a slew of API solutions for the past few years, what made you launch the API Sandbox?

Ritesh Pai: We actually started our API journey in June 2015. The focus since then has been to implement banking-as-a-service to provide customers banking services through an interface of their choice Prior to that, customers would have to come to the bank, or used specific digital interfaces to conduct their transactions.

In the case of internet banking, in order to execute a transaction one still needs to login to the platform and use a user ID and password. Over a period of time, we started implementing some use-cases with our corporate partners — but they were highly customised and had limited replicability. At that point in time, we came up with APIs for banking-as-a-service, where we built one platform for multiple consumers.

However, in the digital age, technology obsolescence is one of the biggest challenges. So over the last four and a half years, our learning has been that while this has worked, the idea is to align ourselves with the change [in tech adoption] and build on the 1000+ corporates who are already using these services.

Inc42: How does the API sandbox help in this regard?

Ritesh Pai: The biggest advantage is, of course, the entire bouquet of APIs that are being offered. Some of the APIs that we built were developed for scenarios that were more unidirectional or monolithic in nature. Now, there is a lot of focus on UI and UX as well. Hence, our APIs also needed to be very nimble, agile and efficient. With that thought process in mind and a lot of customer feedback and listening to the startup ecosystem, we thought that this would be an exciting opportunity.

Evolution is also essential because the customer does not always have a precise idea of what they want. And, if we are able to identify gaps and end up creating a ‘wow moment’ for them, this is more than just a proactive step. This is how we are trying to drive innovation at YES BANK. So, anyone who will start working on this particular developer hub, the API sandbox, will find that they have tested for all use-cases. The experience is as good as working in a production environment. Just that the final database pointer is not pointing to our production setup.

It is more like a do-it-yourself kit where one can go through all the APIs and find one that is the best fit for this product. As I said, since we have used a lot of microservices and very agile, efficient and nimble-footed APIs, a lot of UI/UX is under the control of developers. They can orchestrate the APIs in such a way that in one call they can actually call multiple APIs and get better output for their objective.

“We looked at it from all angles — the security aspects, the handshakes. So if they [developers] want to do any kind of stress test of doing volume transactions or transactions per second and also want to see success rates, all of this can be tested. So the time to market is faster.”

Inc42: How many APIs are currently available on YES Fintech Developer?

Ritesh Pai: We have already announced 50-odd APIs and by the end of this financial year, we will easily cross over a hundred. We have taken big strides in a lot of areas with this technology, particularly in payments.

In the earlier version, one had very limited partners that they could engage with. With our DIY approach, subject to bandwidth, there could be 80, 90 or 100 partners who want to participate, as the entire ecosystem is not just ready, it is also geared up for taking volumes.

Inc42: Is open banking the future? How does the API sandbox help in achieving this?

Ritesh Pai: Open banking is the next big thing. It will go beyond the spectrum of payments. Using a similar partnership approach, open banking will also fetch solutions for account acquisition, customer surveys, loan disbursal and other parts of the operation.

“This is a stepping stone to open banking. This will help launch all sorts of products like company salary accounts, trade finance, working capital.”

With this particular developer hub, we will also try to get partners to participate in co-creating such solutions. The idea is that if someone wants to build a solution around any particular application, the YES Fintech Developer Hub would be a one-stop-shop. They don’t have to talk to multiple entities to create that particular product or solution.

So this would be a unifying layer which can be consumed by us and our existing customers as well as fintech startups.

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