APIs Are Changing Financial Services

Ben Goldin

Head of Product & Technology at Mambu

Views 257

APIs Are Changing Financial Services

09.11.2017 07:00 am

The use of application programming interfaces (APIs) is presenting a world of possibilities to financial institutions. They enable the flow of information between applications and gives institutions the ability to easily access customer data, draw insights and create innovative products tailored to consumer, market and regulatory needs.

For partners and third party developers, they provide access to the core platforms on which they can develop more innovative products.  End customers benefit from enhanced products, services and more transparency, enabling them to better manage their personal finance.

New entrants leverage lean and agile technologies like cloud services and APIs to streamline operations, innovate, enable automated processes and reduce the overall cost of doing business.  Legacy bank systems are not built for this level of agility and it is this inability to swiftly respond to market needs that is holding them back.

Modular and Simple

The industry standard use of Representational State Transfer (REST) APIs together with focus on developer experience provided with sandboxes, developer portals and software development kits (SDKs) underpins the new technology.  Using these tools, the learning curve significantly decreases and adaptability of the technology reaches new levels.

APIs empower in-house developers with the ability to innovate and add new features and functionality like custom mobile apps, chatbots or voice recognition capability to their ecosystem in weeks not years. New products or iterations of existing offerings can be rolled out, integrated and modified at a fraction of the cost and time it would take compared to a siloed system.

APIs enable a modular system architecture allowing multiple integrations from new payment networks, customer-facing channels or custom-code for process automation to card processing services and other complementary cloud services. This gives institutions the flexibility to work with best-in-class providers in each area.

Data Security and Regulation

With API-driven systems, access to system data and capabilities is done solely through the APIs, offering significantly more security than manual or file-driven processes reducing the chance of human error.  Single Policy Enforcement points can be introduced such as API management to ensure the integrity and security of information and govern API access centrally across systems.   This is also an effective tool in combating fraud and enforcing necessary segregation of duty regulation given its ability to access and monitor information across systems. 

Automated and Data Driven Decisioning

FinTechs are using APIs to automate and speed up credit decisioning  by using third-party services to cover critical steps. Combining services like identity validation and credit ranking alongside internal insights into customer behaviour decreases new loan approval times from five days to one minute.

Opening Up Opportunities

Open APIs allow industry players like FinTech vendors, software providers and developers to easily integrate to an institution's banking and lending capability, encouraging new ideas.  Not only does this help the institutions deliver an enhanced and personal experience, but it also offers a lucrative new source of revenue.

The New Norm

This technology allows for innovation and customisation in scenarios that institutions cannot possibly predict. Almost like building an architecture without a precise end goal, APIs can take banks into different markets, open up innovation and allow the capability to build something unique.  In time, the need to personalise services will become the new norm. APIs offer the best route to effectively meeting these changing needs, and and it will be necessary for institutions to fall in line or be left behind.

 

Latest blogs

James Stickland Veridium

The Problem Biometric Authentication Solves for Financial Services

There's no denying that the frequency and impact of data breaches are on the rise. Every year the record for the number of individuals affected by a breach rises, with 2017 surpassing 2016 quickly. There were more than 5,000 confirmed data breaches Read more »

Ryan Erenhouse Mastercard

Dispelling the Myths: The Reality about Contactless Security

For many people, paying with a card is still associated with a “swipe” or a “dip”; however, for the owners of more than 370 million contactless cards accepted in over 8 million locations in 111 countries, they pay with a tap. Mastercard first Read more »

Center for Financial Professionals Center for Financial Professionals

The evolving payments landscape: Increasing competitiveness and upcoming regulatory deadlines

In recent years the payments landscape has evolved and transformed, in the near future it seems likely to continue to do so. 2018 is being seen as a watershed year in terms of regulatory implementation deadlines across the financial services space Read more »

Arsalan Danish Mastercard

Fortune Favors the Bold: Modern Nomads

The way we make money and spend money is changing. Read more »

Oscar Nieboer Paysafe Group

2017 Recap & 2018 Predictions

Without a doubt, 2017 has been another momentous year for payments. In the UK, we’ve seen bitcoin soar to record values, and we’ve celebrated two significant birthdays: firstly, our beloved contactless cards turned 10 and secondly, we rejoiced 50 Read more »

Magazine
ALL
Free Newsletter Sign-up
+44 (0) 208 819 32 53, +44 (0) 173 261 71 47 Download Our Mobile App