Consumers expect secure financial transactions on their terms. Driven by a relentless pursuit of customer-centric products and services, and built on APIs, Open Banking is quickly becoming the global standard for financial institutions.
According to Accenture, financial institutions that prioritize Open Banking as a growth strategy can “position themselves to deliver the seamless and engaging digital experiences customers want—and potentially boost revenues by upwards of 10 percent.”
Financial Institutions feel enormous pressure to keep up with the fast pace of change and launch headfirst into digital banking, generate innovation, and stay relevant. APIs are the anchor for this effort, and since we eat/live/breathe APIs, we have a lot to say about their importance (like in this post here, for example).
In this urgent market, it’s worthwhile for us to recognize that creating the digital products and services consumers want doesn’t happen in isolation. It’s a result of a strategically crafted digital ecosystem that includes partners, internal stakeholders, and developers.
What makes a high-functioning digital ecosystem? Two key components are API management and Integration Platform as a Service (IPaaS).
An efficient-yet-fast digital banking rollout relies on effective API management. An API Management solution is the secure system in which APIs are governed, designed, documented, published, and reported. Essentially, it’s the rulebook, playbook, and analytical tool for all the APIs your financial institution uses.
Effective API management sets the guardrails around:
Who can use your APIs, and for what purposes?
What data is collected and where is it stored?
What are the runtime capabilities and usage limits?
What are the security policies?
In addition to the governance guardrails, a good API management system also includes a developer portal, API catalog, and lifecycle management tools.
An IPaaS is a platform that connects different systems across your financial institution. We go into greater detail about it here. As an example, an IPaaS platform would use APIs to connect a legacy core banking system with CRM software.
An IPaaS is important because it helps:
Share access to data within your organization
Reduce employee downtime
Increase customer service, satisfaction, and retention
How do API Management and IPaaS Work Together?
If your API Management isn’t comprehensive or specific enough, your business will suffer. Your business may be open to security vulnerabilities or be out of regulatory compliance, and your customers may not get the experience they want.
Conversely, if your IPaaS isn’t comprehensive or specific enough to connect the right people to the right tools, you may struggle to make informed business decisions and miss opportunities to generate revenue.
But what if you already have an IPaaS? Do you still need API Management? Or vice versa?
Depending on the solution you choose, there might be overlap between the two. For example, maybe you’ve already purchased an IPaaS solution that has a secure developer portal.
But the primary function of API Management is governance, lifecycle management, and reporting. Your IPaaS should comply with the guardrails set by your API Management and be an internal mechanism to help put it in place.
In other words, API Management sets the company standards for API usage. IPaaS is the tool to create and use the APIs. Your business needs both to be successful.
Why it Matters
Financial Institutions need access to good data to make sound business decisions. APIs are the key to unlocking access to data, connecting it securely, and communicating it in a meaningful and timely way.
Neither solution alone is enough to build a solid foundation. A sound digital ecosystem is inclusive and robust. It equips your partners, developers, and internal stakeholders with the tools they need to innovate and operate smoothly. Together, the API Management solution and IPaaS supply the best environment for success.
The best part, though, is that you don’t have to tackle any of this alone. Companies like Core10 are uniquely positioned to help you design and implement the digital ecosystem that’s best for your FI. If you’re ready to talk APIs, we’re ready to help put your plans into action.