The future of financial services: Open application programming interfaces

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By Mohit Mehrotra
Southeast Asia Strategy Consulting Leader, Deloitte

Application programming interfaces (APIs) allow organisations to leverage their existing IT assets to generate new business value via mobile apps, connected devices and the cloud. APIs have been elevated from a development technique to a business model driver and boardroom consideration. An organisation’s core assets can be reused, shared, and monetised through APIs that can extend the reach of existing services or provide new revenue streams.

Applications and their underlying data are long-established cornerstones of many organisations. All too often, however, they have been the territory of internal R&D and IT departments. From the earliest days of computing, systems have had to talk to each other in order to share information across physical and logical boundaries and solve for the interdependencies inherent in many business scenarios.

The trend towards integration has been steadily accelerating over the years, driven by increasingly sophisticated ecosystems and business processes that are supported by complex interactions across multiple endpoints in custom software, in-house packaged applications, and third-party services. APIs are expected to reduce the time to market for various products/services and lower the cost of build by “plugging in” with open API.

APIs in financial services

Driven by the need to deliver more functionality and faster time-to-market, financial institutions are increasingly exposing APIs to their legacy systems. For example, when launching a new digital bank, a bank can leverage the best-of-breed software needed to run its digital bank and integrate its functionality into their solution via APIs, instead of building every single feature, which would take a huge amount of time and investment.

In the financial services industry, where market data is the lifeblood of any organisation’s business, getting accurate and timely market data continues to be a time-consuming and evasive process. However, these businesses now have the option of linking their systems with external data feeds which provide real-time, historical and reference data without the need for complex in-house data management systems.

The evolution of APIs

APIs have evolved over the years with more than 12,000 APIs, which give financial institutions an opportunity to explore ways to further develop the next generation of technology play.

To manage the cost of building and delivering solutions, service providers need to consider development on clear standards that help in articulating this across the entire business and not just the technology organisation. This will make it easier to develop various ecosystems with corporates regardless of size.

The degree of openness, elements of usability and/or re-usability, and how we can make it easy to interpret, as well other elements such as feasibility, stability, transparency are key priorities of an API management framework. Organisations will need to be clear around how they think through the value story to transition from legacy architecture to micro-services, and how these transitions will help them not only better manage the maintenance budgets but also reduce time to market.

The following is an excerpt of Mohit’s article on open application programming interfaces in the financial services industry. To read the full article, please visit www.deloitte.com/sg/fintechfestival2016.

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