Ways Financial Service Firms Can Benefit from Open Banking APIs: Part 4

The development of the FinTech industry has had a significant influence on the dynamics of financial services ecosystem. APIs became one of the principal tools that must be adopted in order to create a stable basis for the future success of open banking.

In this article we will talk about open banking strategies with API-led connectivity.

Open Banking APIs are a highly important tool that helps financial service providers to diversify their product range, encourage customer engagement and benefit from new streams of digital revenue. In order to create an effective strategy based on the adoption of APIs, companies have to keep up with the innovative technologies and evolving customers’ needs. Modern users are looking for speed, creativity and competitive solutions that will also be protected by efficient security tools.

The key measure that must be adopted to achieve all of the above is the integration of API-led connectivity. It is based on a plug-and-play method that greatly contributes to speed and efficiency. In addition, the APIs can be found through self-service and managed through customized security. These features allow financial service providers to make the APIs accessible to a wider network and contribute to an improved customer experience and the development of innovative apps and services. An approach like this has the capacity to completely change the terms by which IT teams operate at financial service providing companies. Essentially, it will promote decentralized access to data and ensure high level of compliance and security at the same time. This brings the industry closer to the open banking API revolution and enables the creation of an advanced IT architecture.

Management of APIs through API-led connectivity speeds up the implementation of various initiatives and could help capture the market share in the developing countries by introducing mobile-first experiences. Besides, companies would also become prepared to handle pressures from upstarts in these regions. The banks are currently aiming to go beyond internal sharing of APIs and make data widely accessible to larger networks, which would turn them into active participants of the open banking economy. Therefore, in a nutshell, API-led connectivity allows a bank to create a solid basis for future participation in open banking.

By adopting an open banking API strategy, traditional banking institutions can transform into platforms offering banking-as-a-service, a diversified set of opportunities, instead of simply offering individual services. On the contrary, if banks reject the new opportunities, they will enable FinTech startups and third-party developing companies to take away their customers by offering more competitive and innovative solutions for finances’ management. By choosing the banking-as-a-service model, banks will be able to partner with FinTechs in order to upgrade service range, monetize APIs and secure their position within the value chain.