CASE ANALYSIS

Saxo Bank:
Saxo Bank is a Danish bank known for its online trading platform that
allows investors to invest across the global financial markets. The Bank mas
mainly two types of customers: first, individuals of Saxo Bank who use the
Saxo Bank TraderGo Interface and second, customers of other traditional
banks who are white label clients of Saxo Bank.
Mission: “To be the world’s most profitable and professional facilitator in
Global Markets.”
With an aim towards developing a transient innovation strategy as a
producer, Saxo Bank has made its platform available as open API to the 3 rd
Party Developer Community.
Open API:
With the Open API in place, Saxo Bank plans to refocus its business
towards its trading platform as a producer. Open API allows for 3 rd Party
developers to innovate and develop new features. This will maximize
network effects and enable scale as a sustained advantage for Saxo Bank.
Further this will enable Saxo Bank to streamline its development expense on
infrastructure only while the developer community acts as moonshot studios
which will innovate and develop experimental features for the platform.
Building the Developer Community:
Nurturing and Developing a community of 3 rd party developers for the
Open API is as important as taking the initiative of migrating to an Open
Platform. The success of the initiative lies with the dedication and work of
this community.
The initial stage towards attracting developers would be creation of
training campaigns and discussion forums to enable them with the technical
knowledge required to acquaint themselves with the platform. These training
modules need to be detailed and comprehensive to attract developers of all
calibers.
Saxo Bank must then follow its developer community closely and
provide guidance where needed. Development of new features and
improvements must be rewarded and appreciated within the community.
Saxo Bank can start a community magazine for its developers and also host
events to felicitate outstanding innovations. This will ensure that the
community stays motivated to evolve and continuously innovate.
 The Community must also be provided with a global knowledge
platform allowing the developers to seek help within the community for any
issue they come across. This will develop a sense of fraternity among the
developers enabling a long-term relationship.
Building Services:
A detailed business model needs to be devised to draw revenue from
the scale achieved through new services built on top of the platform. The
new services will pay Saxo Bank royalty charges upon using their Open API
structure to promote and develop their services. Also, Saxo Bank could
impose a licensing fee for the developers when their services go live. This
model must strike the right balance between profitability and reliability
allowing the developers to put in enough work while staying profitable.
Developer:
The question begs why would any developer or tech firm choose to
work on Saxo Bank’s platform. Saxo Bank has established itself as a leading
technology solution provider and facilitator of financial markets.
With that being said, it owns the platform and plays the producer in
the given market scenario created. The distributors, startups or the fin tech
companies coming into play do not have the capability to develop the trading
platform from scratch. Development of such a platform would require a large
company with immense resources and the development time would again be
quite long. Given the transient changes in the ecosystem, development of
such a platform starting today might even go obsolete by the time it is
ready. Therefore, it is more beneficial for developers, start ups and tech
firms to leverage on an established existing platform to develop their
business around it.
Fin Tech Trends:
A developer community in place will enable a dedicated series of
improvements to the platform. A culture of responsibility and ownership
must be inculcated in the community. In terms of technological trends, the
fin techs must create an ecosystem with a focus on win-win strategy through
achievement of scale.
While the Saxo Bank caters to the infrastructure required to run the
business, it opens up the opportunity for the fin techs to solely focus on
innovation and enhancements to the system and develop a business model
around the same. With customized UI/UX the fin techs can eventually
emerge to be reliable players in the market.
 The developer community will become a strong asset for Saxo Bank in
helping it achieve scale while on the other hand, Saxo Banks open API will
reduce the barriers for these developers to innovate and experiment. From
being competitors within the market, this will promote collaboration within
the community.
Advantages:
Open API and a dedicated developer community will eliminate the lack
of flexibility in terms of customized user experiences and user interface
designs. This will enable a long-term relationship between the bank and the
community. Partners and developers can experiment and create new
verticals within the ecosystem which previously did not exist. In all of these
developments, Saxo Bank’s Platform becomes a strong core component in
enabling the whole eco system.
The decoupling of Saxo Bank’s value chain is what happens when it
opts for a Open API. Saxo bank will be able to scale its platform to massive
level as the community grows and expands.
Changing consumer behavior with the millennials and Gen Z can be
addressed with communities dedicated to cater to their needs. This will
move the user end of Saxo Bank’s platform to a more customized and user
centric business model.
The need to decouple and achieve scale is very important for
businesses to survive in the digital space.
Strategy going ahead:
Saxo Bank would limit itself from achieving network effects to its gain
if it retained its control over its API. Development expense for Saxo would be
incurred in both innovation as well as infrastructure.
However, opening up the platform has enabled Saxo Bank to achieve
network effects as well as cost benefits in terms of development expenses.
This strategy will allow Saxo to stay profitable while meeting customer
demands and evolving its platform with the arising needs of the community.
This gives Saxo a sustained advantage position as a producer / platform
provider within the ecosystem.