Digital Transformation With an API-First Approach in Finance

By Rory Blundell, CEO of Gravitee

Rory Blundell, CEO of Gravitee

Digital transformation impacts businesses in many industries and drives technological advancements to maximise efficiency beyond what we thought was possible even five years ago. Furthermore, digital transformation in finance is accelerating, driving improvements in business processes and customer experiences, aligning them with evolving markets and businesses.

Behind the success of all this is the application programming interface (API), relaying information from one organisation’s pre-existing technology to another. APIs connect to different areas of a software platform, allowing for more information to be accessed when businesses undergo their digital transformation journeys.

Embracing digital transformation in finance

‘API-First’ is an approach that can help organisations future-proof their development and API strategies in order to adapt to the new rules of the digital market.

Digital businesses, especially banks and financial services could potentially have a head start in adapting to this way of working. Once they have leveraged the wealth of data, information, customer experience and knowledge, they need to adopt an omnichannel strategy to keep up with digital transformation in the wider external ecosystem. This approach will create an environment and culture that delivers both innovation and digital leadership while allowing banks to evolve in line with future demands.

The solution to technical challenges

When talking about technical topics such as APIs, API Management, API Security, Event-driven architecture (EDA) and APIs, it can be easy to talk about value only as it pertains to technical value. However, APIs are able to deliver serious business value as well, and finance organisations that have taken an API-first approach have realised this.

Technical teams have long understood the value of APIs. These teams typically know that APIs can be used to expose financial services as productized APIs, which can enable partner and customer onboarding and avoid duplication in each system interface. They can also prevent database duplication, strengthen security and reduce vulnerability and automate workflows to improve efficiency.

However, decisions to support these technical teams in a building and make APIs available for these purposes are also business and strategy decisions. And, as a result, proper API-first implementation will require business users and stakeholders to more fully understand APIs and their value and understand how API usage can be driven from the ‘business side.

Why API-First?

API-First is an organisation-wide approach that treats APIs as ‘first-class citizens.’ This means that development and business strategies are mapped out with APIs in mind, and, specifically, with API consumption top of mind.

While APIs can be leveraged for many different benefits, there are some major ways that APIs function across leading financial organisations, these include creating a contract that defines who has access to data and services and being an efficiency multiplier. This means reducing the risk of IT components, digital services and datasets needing to be created within each interface or system (for example, by reducing redundancy or by creating duplicate databases in each business unit when designing data flows across multiple departments).

Additionally, providing an ecosystem builder allows key partners, third parties, and consumers to co-create new products and services built off core business systems is crucial. By behaving as a digital enabler, the delivery of new features, products, services and workflows is improved, and working as a data infrastructure element allows for better collection of timely data on usage, performance, and demand to provide business insights.

API as data infrastructure also allows finance businesses to plug into artificial intelligence tools and privacy-enhancing technologies to support an organisation’s maturity as it moves beyond being a digital organisation, to being a data-enabled organisation.

Achieving business excellence

Embracing digital transformation and utilising the full potential of APIs requires a new business mindset – an API-First approach – that actively seeks ways to build digital business models, foster an ecosystem, empower IT architecture, and support cross-team productivity.

APIs support efficiency in many areas but primarily help improve the speed of processes compared to legacy systems. While maintaining core system assets, APIs allow standardising data for use in multiple departments across the business which minimises potential human errors and enhances agility.

Beyond increasing accuracy and improving on current procedures, API enables expanding businesses to access new services. With entry access to the organisation’s data and core systems, it becomes easier to build up the system’s functionality or third-party integrations, creating an environment and culture that delivers both innovation and digital leadership while allowing banks to evolve in line with industry demands.