Ensuring integration delivers digital banking success

Published : 3 years ago, on 09/06/2021

By Ada Westerinen, Director, Solution Engineering, MuleSoft

The past year has been a tipping point for financial services. The pandemic has accelerated the move from “physical” to “virtual” banking, and trends that were already underway have been fast-tracked. McKinsey revealed that cash usage halved in April last year, and the UK Payment Markets report found that nearly three-quarters of consumers were using online banking by June 2020. Now, consumers expect to do everything online – whether it’s opening an account, ordering a new credit card, or applying for a loan.

To keep up with these expectations, banks are accelerating their digital transformations. Much of the pressure to drive this falls to the shoulders of banks’ IT teams. However, with more digital initiatives to deliver than ever before, they are struggling to keep up. In fact, according to MuleSoft’s 2021 Connectivity Benchmark Report, little more than a third (35 percent) of IT leaders in financial services said they were able to deliver all their IT projects last year. This is a huge concern, with almost nine in ten (89 percent) saying that a failure to complete these initiatives will impact revenues in the next year. The world has changed over the last 12 months, and financial services firms must follow suit, facilitating a new way of working for their struggling IT teams.

Lost in integration

Integration is one of the key drivers behind a speedy, successful digital transformation, but remains a stumbling block for many banks. According to MuleSoft’s report, IT teams within the banking and finance industry are spending over a third of their time on integration projects, at an average cost of £2.8 million to their employers in annual labour. Despite all this investment, just over a quarter of banking and finance applications are integrated, hindering organisations’ ability to drive increased business efficiency and better-connected experiences.

So, why is integration currently so inefficient? The crux of the issue is that many banks are still heavily reliant on legacy custom code integrations. This approach can be expensive and complex, and often requires highly technical skills to manage. This means IT teams end up spending too much time on maintenance and not enough on innovation.

Building bridges with APIs

The solution is to embrace a new, modern approach to integrating systems and data, based on APIs. An API-led approach will allow financial institutions to harness a more seamless and cost-effective way to drive integration projects. Rather than building the same point-to-point integration for every new project, a single API can be developed to be reused across them all. This means banks only have to unlock each capability or data set once to empower teams across the organisation to use it again in their own projects.

By connecting data with standard APIs, online and mobile financial services provider TAB Bank has been able to meet customer expectations more effectively, processing loans 60 times faster than before. The bank has also been able to streamline account creation, enabling customers to open new online banking accounts in just three minutes – 100 times quicker than previously. With 200 reusable APIs, TAB Bank has now transformed into a composable, digital bank that is able to automate manual processes and deliver business-critical services to customers, faster.

However, it’s important to remember that as with any technology roll-out, APIs must be implemented with careful consideration as to where and how they fit within the organisation’s overall strategy. A piecemeal, fragmented approach to APIs, using multiple tools and integration platforms, can actually create more data silos that slow innovation even further. It’s important to maintain a broader vision of bringing capabilities together and making them available across all business areas, through a single platform that enables rapid innovation and faster adaptation. Only by sharing data and business capabilities in a reusable manner and with a platform mindset can banks make the most of APIs, and truly change the clock speed of their IT.

Sharing the tools of the future

The value of this API-led approach to integration can also be extended even further with today’s low-code tools, which support drag-and-drop integrations. This can help to ease the burden on IT teams and empower business users to deliver their own integration projects. IT leaders within the banking industry recognise the need to make data and integration accessible to business users to increase productivity, deliver connected experiences and drive innovation. However, very few of them have a mature approach to enabling non-IT users to easily integrate applications and data sources with those APIs, so there is still work to be done.

The world has changed, and IT teams across banks and other financial services organisations are struggling to keep pace with the new, digital-first landscape. The

organisations that arm both their IT teams and their business users with easy-to-use integration tools will reap the benefits of a freed-up workforce that can build value-driven services for customers. By laying down these foundations now, financial institutions can secure their place at the forefront of the digital future.