Creating a High-Functioning Digital Ecosystem With API Management and iPaaS
Although looming economic concerns may have some FI's considering ways to cut down on spending, it is important to note that account holders' expectations of highly optimized digital banking experiences are not going away. Neither is the industry's expected tech spending in 2023 - the Cornerstone Report reveals only 9% of banks and 7% of credit unions expect IT spending to be lower than in 2022.
To remain competitive and relevant, FI's must continue to keep up with the market's fast pace by crafting a strategic digital ecosystem that offers the tech products and services customers crave. Two key components for enabling this high-functioning digital ecosystem are API management and Integration Platform as a Service (iPaaS).
API Management Adopting new tools and services in the current market is essential for FI's aiming to accelerate digital transformation strategies and evolve their digital ecosystem. API management is a rising innovation strategy - 71% of surveyed FI's have already deployed APIs and nearly three-in-10 intend to invest in or implement APIs in 2023. These solutions are critical for building a solid digital network and equipping FI partners, developers and internal stakeholders with the necessary tools to innovate and operate smoothly.
While APIs unlock access and connect data across software platforms, management solutions are designed to facilitate processes of designing, monitoring, governing, publishing and reporting APIs within a secure system. Employing API management tools enables FI's to share their API configurations for flexible developer collaboration, while also controlling access, tracking usage and enforcing data security procedures.
Multiple advantages of leveraging API management solutions include accessing data-driven insights, increasing digital asset development speed and improving the user experience. Effective API management produces these benefits by employing several procedural standards and tools to monitor and analyze the usage of an FI's APIs. API management tools are capable of setting guardrails around who can access the APIs, what purposes they can be used for, what data is collected, where data is stored, runtime capabilities, usage limits and software security policies.
In addition, a strong API management system also delivers a set of end-to-end services that streamline the API integration process. These features include a developer portal, an API catalog and lifecycle management tools that offer a hub for developers to access and share API documentation, a central library for organizing all the FI's APIs and a complete view of the different API development stages.
Integration Platform as a Service (iPaaS) Many FI's are struggling to match the industry's current pace of innovation due to technical limitations that inhibit their ability to pivot quickly and institute full-featured applications. However, Integration-Platform-as-a-Service (iPaaS) solve this challenge by providing solutions that bridge the gap between cloud and on-premise via building seamless integration flows for sharing data across an FI's applications and automating business processes. This integration strategy is the key to unlocking innovation for many FI's as it enables greater functionality without the need to entirely overhaul core systems.
iPaaS is a growing software segment that FI's cannot afford to overlook. Research indicates that the global iPaaS market was estimated to be valued at $1.9 billion in 2020 and is expected to scale to $10.3 billion by 2025.
Incorporating an iPaaS is beneficial for enabling FI's to remain competitive as it helps share data access, increase connectivity, improve communication, increase employee efficiency and improve customer service capabilities. FI's leveraging an iPaaS for integration will gain increased efficiency both externally and internally. Integrating fintech applications into core systems through an iPaaS enables FI's to easily meet customer demands for high digital banking functionality and modernization features, ultimately forging stronger brand loyalty.
While customers will experience more streamlined products and services, workflow automation enabled by an iPaaS will also allow employees to work more efficiently. Integrations through iPaaS provide libraries of pre-built APIs for low-code development, simplifying digital transformation processes for in-house software development teams. An iPaaS solution also includes built-in fraud detection tools and intruder alerts, which makes it easier for developers to spot threats and act to resolve them.
How API Management and iPaaS Work Together When leveraged jointly, API management solutions and iPaaS are crucial to establishing a strong digital environment positioned for success. While API management institutes the FI's data policies for API usage, iPaaS offers FI's the ability to create and use APIs' both are key components necessary for fast-tracking digital transformation. Yet, studies show that cloud computing is not considered a strategy among 7% of banks and 12% do not understand the importance of APIs.
If an FI is missing these solutions or its API management tools or iPaaS is not implemented well or comprehensively, there are several reasons their organization will suffer. Without a strong API management solution, FI's risk inadequately delivering on customers digital expectations, as well as security vulnerabilities and regulatory compliance failures. Likewise, without an effective iPaaS, an FI may miss revenue generation opportunities and struggle to make sound business decisions.
Although there may be an overlap in services between the iPaaS and API management tool an FI selects, each solution offers a distinct value proposition. API management is the key to strong governance, lifecycle management and reporting, the use of which can lead to increased revenue generation, expanded digital functionality and shortened time to market. Conversely, an iPaaS is an essential internal means for maintaining the framework that enables API management, which helps FI's to stay agile amid rising consumer demand for highly functional digital banking experiences.
About Author:
Joel Legg is the VP of Technology at Core10. In his role, Joel is responsible for setting the vision, strategy, and tactics necessary to drive the technology roadmap, while delivering exceptional experiences for all clients in Core10's suite of products and services. Joel has a decade of experience in engineering, team management and leadership.