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

The state of transparency and inclusion in private markets, in 4 charts

  • If Musk privatizing Twitter and Kim Kardashian setting up a private equity firm are indications of things to come, then transparency and inclusion in private markets should be in the spotlight.
  • We look at Carta's Annual Equity Report 2022, which gives a demographic analysis of ownership in US private markets. Here are our takeaways, in four charts.
Lindi Miti | December 02, 2022
4 charts, Business of Fintech

Q3 fintech funding: Investors cut fewer deals and signed smaller checks

  • Facing a looming recession and uncertain macroeconomic conditions, fintech investors are more hesitant about signing large checks.
  • While fintech funding dropped to 2020 levels, the US continued to lead global funding share by a large margin.
Lindi Miti | November 22, 2022
4 charts

How fintech investments fared in Q3 2022, in 4 charts

  • VC investment in fintech has fallen for a third straight quarter in 2022, as health edges past to become the most invested industry.
  • Fintech investments are down more than 60% YoY, from $35 billion in Q3 2021 to $13.3 billion in Q3 2022.
Subboh Jaffery | November 10, 2022
4 charts

How fintech apps help consumers weather economic challenges, in 4 charts

  • Eight in ten consumers use some form of digital financial tool, and half of Americans use apps to manage their finances on a daily basis.
  • Fintech apps are becoming an essential tool in managing personal finance, and have supported consumers through three years of global challenges.
Lindi Miti | November 03, 2022
4 charts

Consumers’ use of digital banks, in 4 charts

  • Two-thirds of consumers have used digital banking services in the past year, such as PayPal, Venmo, Chime and others, but mostly as auxiliary services.
  • While consumer preferences are evolving in favor of digital interactions and sleek user experiences, there are still trust issues involving reliability, security and customer service.
Iulia Ciutina | October 11, 2022
More Articles