Digital transformation

Enabling the API economy in banking

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Digital transformation is revolutionizing consumer and corporate banking—alongside many other industries. As banks embrace the growing importance of digital channels and interactions with their clients, they often talk about the need to have multi-modal or two-speed IT. For example, core banking systems need to provide enterprise-strength, high-volume, transactional integrity without fail. Customer interactions, on the other hand, such as mobile and social experiences, require agile, rapid iteration of capabilities to delight the bank’s customers. These new agile capabilities are often provided by composing new application programming interfaces (APIs) from their existing services based on software oriented architecture (SOA). The banks don’t want to re-create or do away with these SOA services but to reuse them where appropriate and expose them as APIs.

Last week, IBM announced its latest expansion to advance the growing API economy. APIs are important to banks for at least three reasons:
1. They allow for the sharing of internal services.
2. They allow banks to take advantage of external innovations.
3. They allow them to monetize services they provide.

In my recent conversations with banks, two themes seem to come out consistently. One is the lack of good governance on creating and managing APIs. The new APIs have often been driven by urgent project or business needs, without much thought about quality or performance or scalability. Another theme is the lack of API reuse. The application developers often don’t know what APIs are already available, even internally. Hence there is often duplication of APIs being created and therefore lack of reuse.

The recent API economy announcement addresses both of these issues.

For several years IBM has been working with the Banking Industry Architecture Network (BIAN), a community that helps banks to follow common semantic standards for the banking industry when creating or looking for available APIs. BIAN’s business architecture (BIAN Service Landscape) provides a very good construct to help banks organize and manage services in the form of APIs.

IBM’s Information Framework (IFW) model provides more detailed implementation models aligned to the BIAN Service Landscape, enabling creation of standardized APIs. To facilitate the identification and standardization of APIs, BIAN.org now has an active API working group. In these ways and more, IBM and BIAN are supporting open standards in banking.

As banks put in place a governance process for creating and managing API development and usage, the IBM API Management product suite can also be a helpful set of tools.

The new API Harmony capability will greatly aid banks in finding and understanding the APIs that are already available, publicly and also internally. When there’s a new requirement for an API for a business application, it will give the bank an intelligent tool to search for an existing service, compare it to what they need and decide how to best to use it.

The ability to design, build, deliver and manage composable services is an important infrastructure capability in the age of hybrid cloud. The API economy is helping banks embrace digital transformation and delight their customers with better banking experiences.

Learn more at BIAN.org, which provides how-to guides for implementing the BIAN model. And for more information on IBM’s efforts to advance the API economy, you can visit the IBM API economy site.

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