4 charts

4 charts on the state of banking APIs

  • PSD2 regulation will require banks to provide open access to customer, transaction and payment information.
  • Most major technology companies, like Facebook and Google, use APIs as a pillar of their strategies.
close

Email a Friend

4 charts on the state of banking APIs

The rapid speed of technological advances are forcing banks to partner with third parties to be able to keep up with customer demand. Many banks are opening up through private and public APIs to streamline operations and increase innovation. The trend, often referred to as “the platformification of banking” is gaining speed.

In Europe, PSD2 regulation, which goes into effect January 2018, will require banks to provide open access to customer, transaction and payment information via APIs. In the UK, the Open Banking Working Group has recommended the creation of an Open Banking Standard that will make it possible for banking data to be shared and used securely. Banks are getting their API strategies in order.

how-the-4-types-of-api-work-for-a-bank

APIs can assist banks with comprehensive digital transformation of the entire organization. Forrester lists four types of APIs. Internal APIs help banks’ internal systems to “talk” to each other more easily. Partner APIs enable highly customized integrations with select business partners, usually for a specific business process. Public APIs give access to a larger community of developers to increase the speed of innovation. Lastly, Product APIs add value to products by incorporating them into wider ecosystems.

API adoption is gaining momentum, with many banks in the process of API implementation.

apis-are-well-underway

The rise of APIs can also be seen in API request data from Xignite, a financial API company.

xi-ignite-addoption

APIs give companies agility and speed they might not otherwise have. By opening up to a bigger pool of developers, a company can innovate faster, cheaper and more aligned to the needs of its customer base than if developed in-house. By incorporating a product into an ecosystem, the product becomes stickier and loyalty increases.

Most major technology companies, like Facebook, Slack, Uber, Google, and Netflix, use APIs as a pillar of their strategies. Salesforce.com generates 50 percent of its revenues through APIs. Ebay generates 60 percent of its revenues through APIs and Expedia generates 90 percent of its revenues through APIs, according to apigee, an API company.

Though banks are starting to explore the use of APIs, they are still far behind other industries. In apigee’s State of API’s 2016 report, financial services do not even make it to the legend.

apigee-state-of-apis

If, to quote Chris Skinner, “a bank is just a technology company trying to keep up,” it looks like banks still have a long way to go.

 

0 comments on “4 charts on the state of banking APIs”

4 charts

4 charts on why banks need embedded finance to be relevant in the future

  • Banks have an opportunity to rethink their transformation strategies.
  • FIs can consider turning invisible by powering ecosystems instead of going direct to customers.
Zachary Miller | November 13, 2020
4 charts

4 charts on the Lufax IPO

  • Chinese digital lender and wealth management firm Lufax is preparing to float shares in the U.S.
  • The company continues to grow and innovate as financial regulation continues to change.
Zoe Murphy | October 23, 2020
4 charts, Member Exclusive

4 charts on the impact COVID-19 has had on consumer fintech adoption

  • With branches closed, Americans needed the lifeline that fintech provided during the crisis.
  • The number of fintech apps and the frequency people use them have both increased.
Zoe Murphy | September 15, 2020
4 charts, Member Exclusive

4 charts on retail banks moving to platform-based business models in 2020

  • Study finds banks with platform-based business models more likely to survive new digital demands from customers
  • Retail banks struggle with shedding legacy systems
Rivka Abramson | June 22, 2020
4 charts

How credit card issuers can revive their relevance in 4 charts

  • Credit card profitability is dropping due to rewards expenses and changing consumer behavior.
  • New research illustrates a few ways for issuers to remain relevant in their card holders' lives.
Zack Miller | March 03, 2020
More Articles