APIs: The Great Connectors Powering Innovation

APIs allow financial institutions to move more nimbly, enabling more and better services that can keep up with consumers who increasingly expect faster conversions, better mobile experiences, and a focus on digital. Learn more about how APIs are driving innovation:

When you think of game-changing technology shifts over the years, it’s easy to picture big innovations like digital cameras or smartphones or how cloud storage relegated the humble floppy disk to little more than an icon used to save our work. But not all game changers are as splashy and obvious; in fact, one of the biggest drivers of innovation is something the average consumer often isn’t aware they’re benefiting from: application programming interfaces.

We’ve talked a lot in this space about APIs and how they’re revolutionizing the banking industry — and practically every other industry that uses software to interact with customers. Research shows that 52% of retailers say APIs accelerate innovation by enabling partners to leverage digital assets at scale, while 36% say they see APIs as strategic assets for creating business value.

API management is crucial to driving innovation in these spaces, because a well-designed API can lead to increased revenue, the ability to provide more new offerings, and shortened time to market. And as API use grows, so does the need for smart API lifecycle management, from development and design to deployment to ongoing monitoring and analysis.

Why do APIs matter for financial services?

Financial institutions of all sizes use APIs to connect disparate technology and create a seamless user experience for everything from account opening to loan applications and beyond. (Check out this roundup of 5 use cases for APIs in fintech.) APIs enable financial institutions to more effectively embrace digitization — and with the right partner, they can do it without a huge strain on their IT department or their budget. APIs allow financial institutions to move more nimbly, enabling more and better services that can keep up with consumers who increasingly expect faster conversions, better mobile experiences, and a focus on digital.

There are lots of ways API use is driving innovation across industry sectors. Here are a few examples:

• Payments and e-commerce. Think of how easy it is to move money from your PayPal account to your financial institution (or vice versa), or how seamlessly you’re able to make in-app purchases on your smartphone.
• Banking. Consumers have much higher demand for digital banking capabilities in a post-COVID world, and APIs make it easier to streamline legacy financial processes and move more tasks online — such as mortgage loan applications.
• Banking as a service. APIs are driving innovation for banking as a service, where banks are able to offer their services through non-bank entities. As an example, Shopify Balance is built on Stripe’s new Stripe Treasury API in order to offer small business owners a free money management account.
• Financial market data. Financial institutions can utilize APIs to aggregate and disseminate financial market data within their websites, apps, and other platforms to provide customers with up-to-date information on their investment accounts.

Ultimately, APIs are powering digital transformation through innovation by providing an enhanced customer experience, helping to attract more customers, and offering better access to customer data — all of which can help your organization be more successful.

The importance of API management

As the connective tissue between core systems and what your customer sees, APIs are crucial drivers of digital transformation through innovation. As such, how you analyze, secure, and regulate the development and deployment of your APIs is critical to their success throughout their lifecycle. Proper API management is needed at every step:

• Planning and design
• Development and testing
• Deployment
• Optimization

Partnering with the right API developer is a good first step toward ensuring your software will work the way it’s intended while also protecting your customers’ data. (We have some thoughts on how to effectively outsource API development.)

At the end of the day, APIs have the power to completely transform the way financial institutions do business in today’s digital-first environment, and Core10 is uniquely equipped to take the burden off your in-house team and develop the APIs you need to be successful.

If you’re ready to move forward with API integration in your organization, Core10 is ready to help.