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API integration in Financial Services

Increase agility, feed innovation and speed your time-to-market

This blog has been co-authored by Pratik Parikh and Ruchi Bhardwaj, Lead Product Manager at OpenText.

Open banking is happening now, and it is quickly becoming the most optimal path to digitization. As customer and partner expectations shift towards seamless digital flows, financial services organizations are stepping up and taking a keen look at the business value that APIs can create for them and their customers.  

Corporate banking has always been challenged with the formidable task of keeping their large and medium-sized customers happy while balancing the inherent legacy complexity in delivering those corporate services. Financial services have always been and will always be centered around the strong principles of security and privacy, but the notion of open banking challenges those core principles. Financial services organizations must now consider when and how they will share their customer’s data safely and openly with third parties because it really is always about the customer! 

Unlocking business value from APIs 

An API allows different software solutions to send and receive data, whether they operate within an organization or in different organizations. This can be unidirectional or bidirectional flow of information. The APIs could be used for simple tasks like status reporting within a process and validating account balances, or for more complex processes where applications communicate back and forth based on an orchestrated path like executing a payment or onboarding a new customer.  

As financial services organizations set on their journeys to leverage APIs, they must hit some key milestones. Here is a view of how an API ecosystem can be sliced based on the value the APIs bring to an organization.  

APIs for modernizationThese are internal APIs within the bank’s ecosystem to increase operational agility and effectiveness by integrating systems that otherwise would sit in siloes. Key considerations for organizations looking to harness APIs for modernization include: 

  • Industry standards for web services and APIs 
  • Microservices architecture vs. abstract legacy structures 
  • Reducing costs and increasing security 

APIs for corporate connectivity: These are partner APIs where a bank interacts with their corporate customer and external partners to increase co-innovation that extends distribution reach and creates new business models. Leveraging partner APIs can help organizations to: 

  • Modernize corporate to bank connectivity 
  • Move to real time information flows 
  • Enable straight through processing  

APIs for banking innovationThese are public APIs that open the bank’s ecosystem to external innovation, data sharing and API commercialization to create a powerful innovation hub and introduce new business services. In tapping into the opportunities provided by public APIs, organizations should consider: 

  • Open banking regulation 
  • Developer portals to engage developer communities  
  • Promoting APIs to encourage adoption 
  • Creating higher value services from more granular APIs 

APIs act as a business multiplier that can be applied across all segments of corporate banking. They have the ability to power the lifecycle of processing and transactions from onboarding, to transaction processing, through to payments and treasury management. Third parties in the ecosystem can also seamlessly service those activities by connecting directly into the banks. 

What is the path forward?  

Financial services organizations should start with APIs that connect and modernize by facilitating integration between legacy bank systems and new services. They should also expand the APIs that power seamless corporate connectivity or provide new third party services. And with this critical mass of APIs, they will then create an avenue for innovation and sharing; that will eventually lead to new products and services for customers and new revenue streams for the bank.  

Learn more 

Learn more about how OpenText™ Business Network API integration approach helps automate business processes. Watch the BNX211 – API Integration in Financial Services: Increase agility, feed innovation and speed your time-to-market session from OpenText World 2020 to learn more about corporate banking use cases and opportunities for API integration.  

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