In a world of increasing digitalization, banks have lagged behind fin-tech startups in terms of innovation and face an additional threat from large incumbent technology firms.  To catch up, some banks have begun to tap external sources for innovation, and even shift outright toward the model of technology platform. Capital One, one of the largest providers of banking products and credit cards in the US, is leading the charge among financial institutions into the developer community.
When technology and design approaches are uncertain, and customer needs are varied or not yet fully understood, opening innovation to the outside world can have considerable advantages over traditional internal development.  For an example, one need look no further than the Apple iPhone and App store. Thousands of external developers have contributed applications, greatly enhancing the value of the iPhone to the consumer.  At the same time, Apple can outsource the development of content, including the costs and risks, while focusing on maintaining the iOS platform. 
Banking represents a similar opportunity for open innovation. While banks sit on a mountain of transaction, product, and customer data, the best ways to improve digital services are not clearly defined, and app development lies beyond the banks’ traditional core competencies. By opening access to third parties via API (Application Programming Interface), banks can crowd source new and innovative solutions for their customers. 
Unlocking Outside Innovation
In 2016, Capital One launched its developer portal – Capital One DevExchange – with three open APIs, and many of the best-practice features that developers have come to expect: documentation, testing environments, and reference applications with sample code.  Since then the company has released additional APIs, as well as several open-source projects, and has also hosted hackathons where external developers and other stakeholders can collaborate on new projects.
Already, these initiatives have resulted in new and useful services for Capital One customers. As an example, AwardWallet, a loyalty account and travel plan tracking tool, was able to integrate the DevExchange’s Rewards API into their site to pull in a users’ Capital One Rewards Balance information. AwardWallet can then send the user a notification when the balance hits a certain amount, letting them know when they have enough points to redeem for a flight. 
An alternative example comes from an integration with another platform service, Amazon’s Alexa. Capital One customers with the Amazon Echo can check account balances, pay their credit card bill, and redeem rewards points simply by asking Alexa. 
Looking ahead, Capital One has a pipeline of new APIs to be released, including a Customer Transactions API, which would allow a customer to view the Capital One transactions within another app. Xero, a provider of cloud-based accounting software to small businesses, has already emerged as a partner. 
Toward a Banking Platform
While the progress made by Capital One so far is significant, there are several steps they can take in the future to further solidify their position as an innovation leader and the partner of choice for developers. These include a greater variety of APIs to continue to attract developers, a new focus on the developer experience, and new methods of distribution to consumers.  Having discussed some existing and potential API applications above, we will focus on the second two factors here.
Beyond simply releasing additional API products, Capital One should focus on further fostering the developer community. First, this means that the definition of “customer” must also include software developers and partners using the APIs. For now, the developer ecosystem for Capital One is in a relatively early stage – product development is encouraged through hackathons and there is online support and documentation for API users. As the portfolio of DevExchange products expands, more resources will need to be invested in maintaining them and carrying out support services. Capital One’s organizational structure will need to continue to evolve as the community matures.
Another key success factor revolves around the way that consumers ultimately interact with the new innovations developed as a result of the platform. Today, while there has been a great variety of applications developed, there is no single place for a consumer to find and compare all of them. In the same way that we have an Apple App Store, could Capital One develop enough traction to establish an app market place of its own? 
The key open questions revolve around the relationship between Capital One and its two customer bases: banking customers and developers. Should new APIs be open and free to developers, or limited to partners who pay per usage? What sort of value sharing arrangement will allow for the greatest proliferation of ideas?
 Karen Mills and Brayden McCarthy, “How Banks Can Compete Against an Army of Fintech Startups,” Harvard Business Review, August 15, 2017, [https://hbr.org/2017/04/how-banks-can-compete-against-an-army-of-fintech-startups], accessed November 2018.
 Kevin J. Boudreau and Karim R. Lakhani, “How to Manage Outside Innovation,” MIT Sloan Management Review, Vol. 50 No. 4, Summer 2009, via EBSCO, accessed November 2018.
 Birgitta Bergvall-Kareborn and Debra Howcroft, “Crowdsourcing and Open Innovation: A Study of Amazon Mechanical Turk and Apple iOS,” Presented at The 6th ISPIM Innovation Symposium – Innovation in the Asian Century, Melbourne, Australia (December 2013), accessed November 2018.
 Kevin J. Boudreau and Karim R. Lakhani, “Using the Crowd as an Innovation Partner,” Harvard Business Review, April 2013, via EBSCO, accessed November 2018.
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 Capital One, “API Case Study: AwardWallet’s Integration of Rewards API,” [https://developer.capitalone.com/case-studies/RewardsAPI-AwardWallet/], accessed November 2018.
 Capital One, “Alexa, ask Capital One, what’s my balance?,” [https://www.capitalone.com/applications/alexa/], accessed November 2018.
 Capital One, “Speed to Innovation: Xero’s Customer Transactions API Integration,” [https://developer.capitalone.com/case-studies/Xero-Case-Study/], accessed November 2018.
 Anupam Majumdar, Sudipta Kundu, James Foster, “Competing in the New Era: Finding Value in Open Banking Ecosystems,” Accenture, 2018, [https://www.accenture.com/t20180706T062051Z__w__/us-en/_acnmedia/PDF-82/Accenture-Competing-New-Era-Open-Platform-Banking.pdf], accessed November 2018.