• Jeroen van Winden

An SDK - what is it and how does it facilitate customer value?

A ‘Software Development Kit’ is a powerful tool for accelerating the creation of customer value. Especially in emerging markets such as open banking it facilitates experimentation and implementation of new customer propositions. So what does this mean concretely?

First things first: what is a Software Development Kit, or SDK? To explain, consider the analogy where you want to cook a new dish. You already cook dinner on a daily basis, but you intend to experiment with something new. One day you come across a meal that you know your family would love - and you want to add it to your offering.

You could of course decide to try and replicate the meal from scratch, but you would have to identify all the ingredients, amounts and specific cooking techniques yourself; a time-consuming and complex undertaking. Another option is to just buy the whole meal pre-cooked and serve it to your family. Yet, this means you can never add your own flavours or present it in your own style. Moreover, it will be the same each time you buy it.

Then another option is to use a meal-kit. It contains everything you need to cook the meal: the ingredients, the list of required utensils and an elaborate recipe. Yet, you have to do the cooking all yourself. You could decide to add your own ingredients, apply some of the ingredients elsewhere or recombine parts of the recipe with other recipes. As a result, it does not only help you to cook one dish, but opens up new potential for many other dishes. 

An SDK is the software equivalent of a meal-kit. It is a way of ‘packaging’ the functionality of an application, so that it allows it to be used dynamically within other applications. This enables one app to import specific features of another app, without having a copy of the complete software. SDKs are platform-specific, so an ‘Android SDK’ is used for Android apps, a ‘web SDK’ for web applications and so forth.

Why should we care?

In essence, a prefabricated application will provide an excellent solution for a specific target group. The customer journey offered provides users with a value, but none of its components can be applied in the customer journey of other apps. By contrast, an SDK enables app owners to enrich their customer journeys with the functionality of another app. This means a huge potential for new customer journeys since apps can benefit from each other’s core competencies; just to show how powerful this is, the average mobile app uses more than 15 different SDKs! This can be anything from integration with advertisements, Facebook login, notifications or any third-party software you can think of.

An SDK makes it simple for an app owner to enrich the customer journey with functionality of another app

SDKs provide the additional advantage that the integration of functionality is technically relatively simple. This allows the people who want to integrate a functionality - e.g. the product owners of an app - to focus on creating customer value without complex technical challenges. For Bittiq’s open banking SDK we lowered the barrier of experimenting with new customer journeys even further by offering a mock version of our SDK. It enables companies to experiment with customer journeys that would involve PSD2 connectivity, without yet actually establishing that connectivity. This accelerates the emergence of new customer-facing propositions in this relatively early state of open banking.

An open banking use case

To translate this into a concrete use case for open banking, let us consider ‘an app for personal finance management’. The functionality of such an app generally includes a bank connection, recognition of subscriptions and monitoring of account balances, expenses, budgets and so on. All in all, it offers the value of being a great tool for overview of your personal finances.

But if the bigger purpose of the app is to help people with their financial lives, the functionality of our personal finance app must have many applications in other financial value chains, right? In buying a house, investing for later, staying out of debt? This is possibly a huge potential for the app’s features, where ‘a personal finance app’ is actually just one of the many propositions. Its components can be applied elsewhere and really open up the way in which the user is reached with relevant solutions. This is exactly what true open banking is about - integrating features and services based on financial data into relevant value chains!

Let us look at a few examples of how the functionality of the personal finance app may create new value elsewhere:

  • In the current onboarding process of a mortgage provider, people manually enter data about their financial situation. By integrating the SDK, they can offer users the possibility to connect their bank account and automatically get the right insights. The result is time saved and more reliable results for both the consumer and the company.

  • A mobile phone company notices some users struggle to pay their subscriptions on time. They import the subscription recognition into their app and use it to build a new customer journey that helps people to pay their bills on time.

  • An app providing tips for people in debt integrates the budgeting feature to help their users more with staying out of debt.

  • A company promoting sustainability among consumers applies the expense categorisation feature to determine their carbon footprint, and to help them lower it by suggesting sustainable alternatives bought by their peers.

Just like that, the functionality offered by the personal finance app has been applied in three different existing value chains. Concludingly, an SDK can help app owners to reach consumers with new relevant solutions in a quick and simple way.