Actually, it’s not an API, it’s the lack of one that can make the CIO cry.
API (Application Programming Interface) refers to something quite technical and involves creating a technology capability which ensures the bank can be connected and flexible. They typically serve as a facade to complex back-end systems which provide the products and services delivered to customers. APIs are constructed to expose a specific business function, and harnessing their power enables banks to focus on creating engaging and powerful user experiences.
Why is it so important to have APIs? For a start, it’s a way to unlock enterprise data in a structured and secured model.
For example, an API is a tool that makes the transaction functionality accessible. Don’t forget many banks around the world are still running systems which were developed for a banking model based on branches and passbooks. The success of platforms such as Facebook and SaleForce.com is partly due to their ability to participate with partners in an open technology ecosystem. This participation is powered by well-defined and accessible APIs (using technologies such as REST and SOAP).
It’s also critical to ensure that APIs are not a bolt on to the technology but rather the new heart for a service, giving open access to a community of connected partners (note that does not mean they need to be free). Once an enterprise has freed the core functions, further standardisation and reuse will allow faster and lower cost delivery of customer-centric services.
Pushing this model further, there’s an argument for giving customers’ ownership of their own data. Take, for example, an app that ‘mashes’ transaction locations with a customer’s social graph on Facebook or Twitter. In this scenario, the app uses this information to alert the customer to offers from restaurants, retailers and others. However, the customer would choose what to share and how—the location of a transaction, but not its value, for example.
Although this might sound far-fetched, it’s not a million miles away from the current arrangement on many social networks where participants use their privacy settings to determine what they share and with whom. Indeed, banks need to prepare for a generation of consumers for whom these settings are part and parcel of their online relationships with social networks, retailers and others.
To sum up, APIs allow business to rapidly deploy services and increase business agility, which makes them good for the customer, the business and the CIO.
If you’re in the business of financial services technology, how are you making sure your products can work in this new API ecosystem? If you’re a financial services provider, such as a bank, how are you adapting your business to operate and win in this emerging environment? The API is the connector between technology, people and products or services. It is a fast-evolving space and if you’re not in the process of reinventing yourself and adopting APIs, you can bet your competitors are.
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