Open APIs have had a transformative impact on the financial services industry over the last few years. The technology has accelerated competition and business model innovation in the sector, enabling organisations to share data using basic standards and easy-to-use platforms.
Whether it’s through handling consent and authorisation of movement of money and transactions, managing individual customer data, helping make payments easier, or expanding a business ecosystem by offering services such as white labelling, the true power of the API lies in allowing a business to focus on creating new customer experiences.
API is a term used in computer programming for decades - it’s an application programming interface that allows various software components to communicate and share data within a clearly defined method of communication. It allows any developer (if it’s open sourced), to create an application based on the data that API returns, thus the value of an API grows the more third-party developers use it.
As the amount of data needing management grows, financial services companies can use APIs to offer their customers, their staff, and their business partners new tools that streamline operations and positively impact everyone’s bottom line.
The overall impact of this technology is summed up in the term ‘the API economy’, which refers to how the technology can affect a company’s profitability.
APIs help businesses scale quickly by leveraging the interface to access third-party data and services. In financial services, that means access to market data, and the tools required to deliver operational capability and service delivery.
By taking care of the background data and tech, platforms such as Hubwise allow investment firms to better control and shape the customer experience, extend eCommerce platforms for business partners, or to simply standardise numerous products and services in dozens of countries. Essentially, APIs make it easier for you to deliver enhanced services, make significant back office and IT savings, and focus more on providing customers with a powerfully effective service focused around the core brand proposition.
They are also perfectly adapted to handle new technology trends. For example, APIs are an essential tool to access Big Data-driven services that unlock the enormous potential of machine learning and artificial intelligence. These have the potential to transform practically every aspect of financial IT: from technical operations and systems management deep in the back office, to strategic business intelligence and risk management, to front-office trading and the customer service helpdesk.
The agility and scalability afforded by APIs means that anyone can make their business services available to the whole world with a few clicks.
In summary, APIs redefine the nature of partnerships, allowing companies to participate in ecosystems without the need for extensive development, customisation and costs associated with the traditional approach to building and managing an IT infrastructure. In addition, they enable companies of all sizes to tap into services – such as cognitive computing and the Internet of Things (IoT) – that are too difficult, expensive or time-consuming to reproduce in-house.
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