How APIs are transforming the Banking & Finance sector

Presently, the payment industry is thriving, with its constantly experiencing disruption driven by the new players, new risks and incessant opportunities. So, who exactly are the key drivers of this disruption? Well, they are none other than the robust Application Program Interfaces aka APIs, which completely transcended technology.

Looking back, APIs have been there for two decades almost and at that time they remarkable helped big firms like Amazon, eBay, and Salesforce, making them scale and grow. Since then, they have transformed so many industries, brought in new opportunities and enhanced rewards against the risks of the digital landscape. In the travel world, API-driven public applications like Expedia & Travelocity enable the shoppers to choose their best travel option while the partner, data apps or device share the information, enhancing sales, service or logistics.

In the case of telecommunication firms, they are also offering payments, messaging and location APIs, reinstating value chains & revenues. The banking revolution began in 2004 when PayPal introduced PayPal API. It opened some of the platform functions to third-party developers, further expanded the services across the markets. To make the most of this trend, banks started hiring dedicated developers to integrate API in their system.

Meanwhile, there are still several traditional payment providers unwilling to entirely embrace the API system, as they think of API programs as technical endeavors as they often fall short to attain real business impact. But the good thing is that many banks and financial firms are acknowledging this fact that going to the market with an API-enabled approach will offer them a chance to gain market benefits. For instance, some of the data-heavy APIs offer banks a seamless approach to sell to the third-party firms appropriate data that can be reused and there this will add value to the customers.

Read Also: How to Create a Mobile Banking App Successfully

At the same time, as a firm adopts an API-driven development approach, it also ensures that they keep up with the direction of the payments market.

Industry newbies like Stripe find success using APIs that engage both the developers and businesses in a friendly manner. It is crucial to understand that competition in the ecosystem is fierce right now, thus any of the most market share would be harder to be recovered later on. The present market is innovation-driven and hence it is turning more crowded and competitive day-by-day. And then there are these regulatory changes to meet that are driven by the governments and are driving sudden changes. Europe’s Payment Services Directive (PSD2) & Access to Accounts (XS2A) have mandated that financial firms must provide their customers & third-party integrators programmatic access, that too API-based in most of the cases, to their data.

Right now new & regulatory frameworks are taking hold of the market across the globe, and the organizations that are not adequately prepared may face high costs of strategic change. They may find themselves at a substantial disadvantage as the marketplace evolves rapidly.

 How can you make the APIs work?

APIs are an integral part of any of the digital enterprise and they are crucial for the successful digital transformation. Looking beyond the IT-driven project, it is vital to understand the need to treat an elaborate API program as a joint venture between the business & technology.

At their very core, they are these business products that are best designed to address a particular requirement in an appealing, easy-to-consume manner. The more people use API, larger is going to be its impact.

Related Blog: Hiring Mobile App Developers? Read this before you start!

Scale: If a specific set of APIs gains rapid prominence, for instance, payment processing API that can be used in the mobile apps, then it is possible for the providers to address that demand sans any performance issues & easily scale products.

Developer portals: Developer portal is required to give developers seamless access to the APIs, enabling them to communicate with the other developers and with API host which helps them in learning how to best utilize the API. It also enables the providers to learn from the community and get a better understanding of it. This will help in driving positive business results for each of the individuals involved.

Analytics & Tracking: With an effective API platform it is easier to monitor API usage, traffic, API economics, API adoption, run-time performance and several other measures that point to return on investment performance.

Stability: The current market is evolving and the vendor landscape is rapidly changing with traditional technology firms acquiring API management platforms that help them in making their overall integration offerings way more appealing. Thus, at times navigating through this environment can be quite complex.

Accountability: APIs can greatly contribute to the organization’s digital vision and this one vital factor makes it enough to embrace & execute an API strategy.

Documentation and Lifecycle: To attain efficiency & effectiveness, you need tools that help in managing processes for developing, designing, publishing, deploying, versioning & governing APIs. The procedure can turn complex and error-prone in case it is attempted by a tool that is not designed for the APIs.

Agility & Speed: Banking & Financial service providers require these two crucial development traits, so it can adequately capture market opportunities. These are best gained when IT and business work together, acting rapidly and effectively funding the API-enabled opportunities.

Dual-Speed IT: An API layer does the job of effectively extracting the data required from the backend systems and makes data consumption easy. This way it removes any divergences hindering innovations, like web, mobile, or any other.

Final Note: As you move ahead with the API enablement, it is advised to start considering APIs as collaborative products help to enhance business revenue. It can be considered as a board-level move beyond technological development and it is a new way to work and create value from outside in, and it demands commitment both from IT and business. Next, for driving quick wins, you require identifying & understanding key use cases, and then implement them and learn from them. Recognize the areas that business could be missing out on and find where the new players are doing well and where exactly you can use the data best for the business. Once you do that you are ready to garner huge success. 


Leave a Comment

Your email address will not be published.

Scroll to Top