opustechglobal-com-the-power-of-api-in-banking-.pdf
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The document discusses the transformational role of banking APIs in modern financial services, emphasizing their ability to enhance communication, drive innovation, and foster financial inclusion. It outlines various challenges banks face in implementing APIs and highlights the importance of API monetization and a platform-based approach for future competitiveness. Finally, it predicts significant growth in the global banking API market, necessitating partnerships with tech providers for optimal utilization.
opustechglobal-com-the-power-of-api-in-banking-.pdf
- 1. BLOG The Power of API in Banking May 13, 2024 Share: Banking APIs offers more than just enabling instant payments or embedded loans. Discover how you can extract maximum value from APIs. Banking APIs are digital adapters that enable communication and secure data exchange. They allow third parties to access the functionalities of the bank and extract value from customers’ financial data. APIs are key for banks to foster a supported and reliable financial ecosystem. From real-time payments to micro-lending, cross-border transactions to neo banks, APIs underpin every leap banking takes in the age of globalization. Types of Banking APIs Three common types of banking APIs are: Industry Segment Strategic Services Platform & Solutions Resources Partners Who We are We’re Hiring Contact Our Experts Industry Segment Strategic Services Platform & Solutions Resources Who We Are Careers Contact Our Experts Careers Contact Our Experts
- 2. APIs Drive Banking Innovation APIs have ushered the banking industry into an era of introducing revolutionary products and services, designed with data-powered insights. Additionally, banks can monetize the data by sharing it with third parties. APIs are the cornerstone of all the emerging and trending banking transformations With banks prioritizing APIs, their integration maturity level has grown 23.3% within 2 years across the strategic, operational, and technological dimensions. Process Enhancement Connecting banks’ core systems with software applications and data lakes through APIs has enabled banks to measure and enhance operational efficiencies by uncovering existing bottlenecks. Banks also leverage APIs to validate compliance adherence. Automation has further reduced exposure to manual error, improving operational accuracy. Personalization By categorizing spending, enabling budgeting, and assessing customers’ financial goals, APIs empower banks to offer tailored products and services. APIs have allowed banks to ride on the hyper-personalization movement, at par with other industries. Digitalization The extensive digitization of payments is an outcome of the effective use of APIs that enable automated bill payments, one-click fund transfers, simplify cross-border transactions, and promise a frictionless future for money movement. Open Banking APIs have fostered the idea of decentralized financial management and allowed users greater control over their data. Further, the latest banking paradigm has enabled non-financial organizations to leverage financial data. Converging Finances APIs have facilitated the convergence of financial management for users by enabling instant payments through a mobile app, after verifying the balance. Integrated microfinancing and credit facilities, along with budgeting and financial management tools, to give users a comprehensive view of their financial health and tailored advisory to maintain or improve the same. Fostering Inclusion APIs enable collaboration across the traditional regulated and unregulated financial structures. This has enhanced oversight and financial inclusion by breaking down the barriers that hindered banks from making their services available to the underserved. Industry Segment Strategic Services Platform & Solutions Resources Partners Who We are We’re Hiring Contact Our Experts Industry Segment Strategic Services Platform & Solutions Resources Who We Are Careers Contact Our Experts Careers Contact Our Experts
- 3. Top Challenges Banks Face in Leveraging APIs Skill Gaps Banking API implementation requires developers to be adept at banking, technology, third-party collaboration technologies, and regulatory guidelines. Banks often lack the technical expertise and workforce that can be trained to harness the power of APIs. Compliance Concerns With data sharing becoming ubiquitous, compliance with privacy, security, consent, and anonymization guidelines is paramount to ensure increased collaboration opportunities. Additionally, identifying and ensuring that third parties also comply with regulations adds to the complexity of the integration process. Technical Inadequacies Legacy technologies and deficient data infrastructures create hindrances to orchestrating API integration at scale. Vulnerability Management Effective use of APIs entails sharing sensitive information with diverse market participants, exposing banking systems to a wide range of potential threats. How to Get API Monetization Right Adequate API monetization enables the smart design of technological infrastructure to control exposure and enable faster development while reducing time to market. APIs are no longer mere connectors. Banks must adopt an API-first approach to optimize their value. Considering them as discrete, well-defined, and managed products, rather than just integration elements, can position banks as facilitators of interoperable, efficient, reusable, and customizable financial technology products. The plug-and-play feature allows banks to offer and monetize exactly the kind of APIs their partners need, adding flexibility to integration models. Bank as a Platform Platforming is a fresh perspective on banking, with a promise to disrupt the sector. It allows banks to build an ecosystem connecting customers to providers from a variety of industries through digital devices. APIs are the foundation of platforming since they enable Industry Segment Strategic Services Platform & Solutions Resources Partners Who We are We’re Hiring Contact Our Experts Industry Segment Strategic Services Platform & Solutions Resources Who We Are Careers Contact Our Experts Careers Contact Our Experts
- 4. banks to securely and efficiently integrate internal systems with partners. Consider the following examples: BNY Mellon’s integrated API-based platform connects not just TPPs (third-party providers) but also customers and FinTechs to offer apps, leveraging big-data solutions. Barclays’ private digital platform serves as an innovation lab for FinTechs to create novel offerings. DBS has expanded its revenue streams by launching a marketplace for cars by integrating automobile dealers. The platform allows the bank to offer embedded financing and insurance services, much like traditional eCommerce platforms. The Future of Banking APIs When prominent banks and FIs leverage the benefits of APIs, their usage is bound to grow. Smaller and medium-sized banks must also initiate API-fication to remain relevant and competitive in the long term. As the use of banking APIs becomes ubiquitous, here are a few things APIs will enable in the foreseeable future: The global banking API market is forecasted to expand to $17.5 billion at a CAGR of 23% from 2023 to 2032. The key to extracting greater value from APIs for small- and medium-sized banks is to partner with a trusted data migration and technology transformation services provider. With over 26 years of experience in the digital finance space, Opus Technologies drives innovative API integration initiatives to enable banks to optimize the value of their data. Learn more from our experts. Team Opus We’re giving you a fresh dose of insights, perspectives and the latest trends from the world of payments. Join our mailing list to be the first to know about industry news, Opus updates & upcoming events FULL NAME ORGANIZATION EMAIL ADDRESS Please read our Privacy Notice to know how we protect personal data Industry Segment Strategic Services Platform & Solutions Resources Partners Who We are We’re Hiring Contact Our Experts Industry Segment Strategic Services Platform & Solutions Resources Who We Are Careers Contact Our Experts Careers Contact Our Experts
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