Leveraging APIs as a Change Driver in Banking – WSO2
WSO2 – Many banks turn to cost cutting as a means of achieving higher profits, but when it comes at the expense of investing in technology, it’s a short-sighted victory. Banks need to move beyond this outdated way of thinking and understand how customers want to bank in 2022.
From purchasing goods to opening accounts, applying for loans and keeping track of their finances, everything needs to be seamless, secure and fast. To facilitate stress-less ways of banking, financial institutions continue to embrace application programming interfaces (APIs) as the key to unlocking their digitally seamless, customer focused and competitive future. Importantly, financial institutions who are well advanced with their API project are learning how to deploy and manage them much better by studying examples within and outside of Australia to better achieve their business goals.
Modernised APIs
The API world has moved well beyond the traditional “one software application talks to another” mode of operations. Rather, modern APIs are managed so they can integrate multiple systems and databases, both inside and outside the bank.
By leveraging integrated systems and, importantly, consolidated customer data, progressive banks have the opportunity to use APIs to build innovative and flexible solutions and services quickly, enhancing on user experience, customers security and meeting compliance requirements. Having such strategic technology readily available to deploy to enhance experiences dynamically can be a market differentiator for many banks.
Moving forward with new API and mobile-first strategies, as well as ambitious digital transformation programs, will involve overcoming the limits of legacy technology, modernising APIs, and bringing this into a unified API management environment.
However, banks must first transition from creating systems for bank employees to building solutions and systems to cater to the new digital customer. This means understanding how customers, both individual and corporate, want to use API’s and applications, and not how branches once provided a traditional service.
Competitive banking
Research by PYMNTS shows that the proportion of banks that have developed or invested in APIs increased from 35 per cent in 2019 to 47 per cent in 2021. Further, an additional 25 per cent are looking to invest in APIs in 2022.
The banking industry is playing in a highly competitive market, with rapid digitisation and the rise in alternative banking solutions and start-ups. Considering this increasingly competitive space and the rising cost of acquisition, attracting and retaining customers is a top priority for banks.
We know that customer’s behaviours are rapidly changing, driving and reflecting progressive global digitisation. Therefore, their expectations of seamless CX are high, giving their loyalty to banks that can deliver personalised and timely experiences. For example, banks that provide an omni-channel customer service experience have a competitive edge against banks that are still relying on one or two forms of customer service offerings. Similarly, banks with apps that are able to dynamically personalise the user interface and provide richer real-time insights hold a huge competitive advantage. All of these customer service offerings are achievable while enhancing security and compliance through modern API technology.
Using APIs to modernise your customers offerings
To effectively implement modernised customer offerings, you first need to figure out your specific API needs and understand how they relate to business opportunities and your customer’s needs. The challenge here is to be generic enough to devise a workable strategy for the entire bank, but specific enough to be meaningful to the person or corporate consuming the end service.
For example, you might determine that you need your APIs to be capable of external- facing interactions with other entities, as is envisioned under the open banking framework being rolled out in Australia. This ecosystem model of banking might mean securely integrating back-end banking systems with an insurance company or airline rewards program while managing individual consent and privacy, without making your customer jump through hoops for access.
A lot of banks talk about technology as being strategic and talk about themselves as a technology company – but they haven’t really made the step into letting technology be strategic for them instead of just being an expense item. With these sorts of examples in mind, you can start to figure out how your APIs and your API management will need to change to be effective.
