The API economy in banking is here – NOW

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In today’s world of digital banking, customers expect a consistent experience within the branch, on the web, mobile apps, wearables, calls centers and third-party channels.   These sites and apps are fueled by social information, location mobile services and by sensors and third-party data that provide alerts, payments, account management, investment management and customer insights.

Bringing together these two touchpoints of customer interaction and data with managed APIs and cross-channel capabilities can provide a delightful experience for the bank’s customers.   All of these things are rapidly progressing, which creates the need for standards and flexible architectural design critical as we move forward.  In fact, the European Commission has now published a ruling: Payment Services Directive 2 (PSD2) that mandates financial institutions provide third parties access to accounts via APIs. This makes APIs a necessity, not an option for future business innovation to better serve and meet customers expectations.

The API economy is here now and is supported by a new digital banking architecture.   This new architecture must be flexible, adaptable and efficient. It also must be built to create both internally shared services, and services provided by external providers, building that ecosystem of partners to better acquire, serve and maintain customers at all parts of the customer journey.   APIs are the technology for enabling those shared service capabilities.  The changing business model that this new architecture drives is the economy part of the “API economy” equation.

APIs are the technology enablers and gain strength when they are based on standards.  Standards at the business component level as well as the application level are important.   In the banking industry, the Banking Industry Architecture Network (BIAN) organization provides business architecture standards, for example, for business vocabulary and business services.   As a banking industry we can define common APIs that implement business services that are consumed by applications or other business services.  In addition, more detailed implementation models like IBM’s IFW model can enable creation of standardized APIs.  To facilitate the identification and standardization of APIs, has also now initiated an API working group.

With this standardization the banking industry is paving the way for companies to bring together customer interaction and data in the API economy, leading to digital transformation and innovative business opportunities driving the industry forward.

To learn more visit our API economy site today.

Vice President, CTO, Financial Services Sector

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