3 Ways Financial Services Companies Are Capitalizing on APIs


Financial Services APIsWhile some financial institutions may not be known for being on the cutting edge of innovation, several powerful forces have been driving the need for digital transformation, the development of new products and services, and more compelling customer experiences in the financial services industry.

Market conditions like an uncertain economy and increasing regulations, combined with increased customer expectations and agile new entrants to the market, have led financial institutions to move forward with digital initiatives to help be on the leading edge of technology.

However, this has not come without its pains. Business leaders are under pressure to deliver digital transformations faster, along with reduced costs. IT leaders must deliver increased volumes of projects, remove IT as the bottleneck to innovation, and move the focus of the department from keeping the business running to growing the business. Application architects face pressure to incorporate new digital technologies into legacy stacks (including the trusty mainframes) in an agile, flexible way to avoid creating brittle integrations that require constant maintenance. The IT department is being called upon to drive change.

At first glance, traditional, point-to-point integrations may seem like the most logical choice to link together disparate systems and provide access for customers and partners. However, these types of integrations are time-consuming, very system-dependent, and costly to maintain. Each additional system requires new coding and connections, and when the system needs an upgrade, developers and architects are left scrambling to ensure the code is compatible with the upgrade.

Is there a better way than this duct-tape approach?  Leading financial services institutions have already discovered it: APIs. With an API-led integration approach, these institutions are improving their expense to revenue ratios, attracting and retaining customers, and responding rapidly to industry threats. Furthermore, their API Management solutions provide important connectivity, security, and change management capabilities to meet the needs of line of business users, customers, and partners.

In this post, we’ll explore three real-life examples of financial services companies leveraging APIs and the advantages they have achieved.

Improving Expense to Revenue Ratio

In a time of increasing regulations and an often-volatile economy, digital transformation is critical for staying ahead of the competition. But when IT is bogged down with creating and maintaining a plethora of point-to-point integrations, not only is the IT department unable to deliver projects faster, but the institution itself cannot grow.

A global Top 10 bank realized it needed to increase delivery speed in a way that could scale across the entire organization. It repositioned its IT department to serve as a line of business enabler by building an application network of over 500 applications connected through reusable API assets. These highly accessible, discoverable APIs allow its line of business users to self-serve, which lets smaller teams deliver projects four times faster than before the shift to API-led integration.

Related: Why Successful Digital Transformation Requires Integration and APIs

Attracting and Retaining Customers

Increasing customer demands require being able to attract and retain customers with digital offerings and provide them with personalized customer service. However, delivering these experiences can be difficult, particularly if integrations are being established manually (or not at all).

Brokerage firms are at risk, too. One leading investment management firm realized its independent investment advisors needed critical customer information so that these advisors could provide better customer service. Its legacy CRM system was holding them back, but with APIs, it was not only able to migrate to a new CRM system but also provide a unified client view across multiple systems of record. This improves customer service and helps brokers identify cross-sell opportunities.

Related: Building a Single Customer View Using APIs

Driving Innovation and Responding Rapidly to Disruption

With FinTech startups disrupting the value chain, financial institutions need to drive innovation and rapidly respond to this disruption—or risk losing customers. And as awareness of these products and services grows, adoption will only increase.

However, with APIs, they can incorporate new digital technologies in an agile and flexible way to respond to these changes.

One of the world’s largest banks that serves one in three U.S. households increased agility in a post-merger integration by leveraging APIs to create a Banking-as-a-Service platform. This integration allows it to embed its payment APIs in its wholesale customers’ mobile apps, creating a white-label solution to compete with nimble FinTech startups.

Related: API Management Fundamentals: View APIs as Products, not Projects

APIs provide powerful integration and connectivity capabilities for financial services institutions looking to introduce new products and services and to innovate faster.

If you want to learn more about how APIs can accelerate digital transformation while providing customers, partners, and line of business users with more options: check out the white paper from our partner, MuleSoft, Achieving Digital Transformation Nirvana in Financial Services.


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About the Author

Lori Angalich

Lori Angalich is the VP of Marketing at Lightwell. She loves exploring new technologies and business models, learning how things work, solving problems, and developing new ideas with others. She has a Bachelor of Science in Biology and an MBA in Marketing, and she enjoys applying her knowledge from both each and every day.  Lori has a passion for travel, art, wine, music, wildlife (including her two dogs, who are a bit on the "wild side"), and most of all, creating great memories with her family. 

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