Digital transformation is on the lips of every bank’s CIO, whether the objective be to offer retail customers new online services or to create cost and efficiency savings for the business itself. Many banks are still working with legacy software running on a mainframe built on hundreds of thousands of lines of COBOL code. This may hinder innovation and agility – incredibly important when digital up-starts are threatening to eat a significant piece of banks’ service offering pie.
Additionally, the Open Banking initiative, which launched in January 2018, saw many banks open up their APIs for integration with other third party services. This thrust the spotlight onto the importance of APIs and the ability to create new innovative services with the data and the existing business logic that they provide. APIs are crucial because they help reduce the time to market for new services from years to months or even weeks by being able to draw down on logic (code) created by other developers. And, this means that customer-facing apps and services do not have to be developed from scratch and cost millions of pounds.
Running the API integration gauntlet
However, legacy systems may make it difficult to integrate many APIs. To further complicate the issue, banks may not always integrate APIs that have been certified to meet an industry accepted standard. This is, in part, due to the fact that industry standardisation across API definitions is lacking. These definitions are vital – they help developers to annotate API functionalities and provide guidance on how to implement innovative and intuitive digital services across both back-end and customer-facing functions.
With stringent regulatory requirements residing over the way banks interact with customers, IT glitches, and downtime are often met with an impatient customer and often, fines from regulatory boards. If APIs are badly implemented the likelihood that IT glitches will happen increases dramatically. Reputational damage, fines and customer distrust all take a toll on a brand’s future.
An open, flexible, cloud-exchange platform is the key to API integration
The key to helping banks implement APIs in line with best practice, is to use an open platform which provides access to an API repository. The platform should facilitate the sharing of APIs, while also building a member community around it to enable users to share implementation and integration knowledge and foster a collaborative approach to industry innovation. It should also consist of an online library of free API definitions, a common repository to store API data or source code.
There are few enterprise-grade cloud computing API exchange platforms that exist in the industry. There are fewer still which are created by a group of established banking industry participants that have worked to standardise API definitions and ensure that all APIs on the platform are compliant. BIAN has developed just this; in collaboration with over 10 of the world’s most prominent banks and technology service providers, they have built an open, flexible, enterprise-grade cloud computing API exchange platform on the Microsoft’s Azure cloud infrastructure. The platform enables BIAN members and the wider banking industry to explore the world of BIAN-compliant APIs, experiment with member APIs, and integrate them into their solutions at no cost. The platform also allows for contributions to the community, permitting registered participants to on-board their own APIs that follow BIAN standards.
The API Exchange features gamification qualities such as a slick UX and public ratings to enhance community engagement and user experience. The gamified environment is also designed to promote healthy and measurable meritocracy to enhance collaboration and contribution amongst the BIAN community.
Yet, as the platform demonstrates, APIs also need a place (a wiki) for documentation for developers to understand the API protocols, how they are created, and how they can be implemented and tailored according to the needs of the industry.
Collaboration is the cornerstone to true technology innovation
Banks should continue to work together to resolve tech challenges, use world-class solutions, and accelerate their technology innovation. Tackling issues alone will only create more fragmented technology solutions, often unwieldy or expensive and time consuming implementations. In being able to come together to share best practice – particularly through a central repository that contains compatible APIs, standards will be aligned, and the industry as a whole and modernize itself faster for the benefit of the customer.
Not only will open and flexible API-exchange platforms help banks realise the benefits of standardisation, but they will also achieve rapid acceleration in integration, quality assurance, and partnerships within the banking industry. And, critically, the API Exchange swill allow banks to modernise their critical legacy infrastructure and adopt standardised frameworks to facilitate more open and easy collaboration with FinTechs and RegTechs.
3D animation render by Quince Media
Hans Tesselaar has over 30 years’ experience in Financial Services Industry being active for Banks, Insurance companies and Pension funds. For 8 years Hans worked at different management positions within ING, from Chief Architect to Director Sourcing, Innovation and Governance (Director CIO Office).
Hans Tesselaar has special areas of knowledge such as People development, re-organisations / re-structuring of the labour force, negotiating with labour unions and workers councils. As a managing partner of an ICT Consultancy Firm specializing in financial services he has long term experience in the areas of expertise like Strategic Business Planning, Enterprise Architecture, HR development, Innovation.
Hans Tesselaar is a frequently asked speaker and lecturer at congresses and universities.