The banking industry is currently overwhelmed by technological disruptions and heightened customer expectations, with non-traditional players such as Facebook, PayPal, Google, and others quickly usurping roles previously played by banks. Non-traditional players have access to cutting-edge technology, which results in excellent user experience (UX) and innovative financial solutions. Customer expectations cannot be met by traditional banks which restrict themselves to digital solutions such as mobile apps or 24/7 customer service.
However, banks can choose to be savvy and make the right choice of opening up their APIs to these third-party products and applications. According to one survey, 55% of financial institutions believe that API integration is critical to business strategy. Banks need to collaborate with newer and non-traditional players and open up their APIs in order to remain competitive and witness growth.
API integration is an urgent need
Behavioral changes and customer preferences have vastly changed over the years, with millennials and Generation Z expecting more from their banks than older users. Providing excellent customer service and a great mobile application are simply not enough anymore, because of the innovative disruptions initiated by non-traditional players.
According to a report published by Intelligent Finance, Baby Boomers (or those born between 1946 and 1964) considered poor face-to-face customer service as a major determinant to exit a bank, while millennials revealed they would exit a bank not only if they disliked its smartphone app but also if it suffered from security breaches. Younger customers are also likely to quit a bank if they are unable to use their bank accounts on third-party applications and products. This is a gap that non-traditional players have capitalized on, and is an existential threat to traditional banks.
People aged between 18 and 34 are two times likelier than older customers to use mobile payments and P2P lending products. In addition, the same demographic group prefers to receive constant updates via preferred channels such as text message, app notifications, etc. As Millennials grow older and more affluent, and as Generation Z takes the place of the millennials, the importance of digital banks providing a holistic financial ecosystem consisting of third party products and services used by customers become more apparent.
Here are some successful examples of API integration:
If traditional banks do not understand the metamorphosis that has already taken place, they stand to lose more of their existing and future customers to non-traditional players.
Specific reasons for API integration
What kind of apps need integration?
New services and applications that need API integrations with banking applications include:
API Integration can prove to be challenging
If you thought your in-house developers can release an API along with the application, you will be disappointed to learn that in 2019, it is a very complex situation.
Here are a few other APIs commonly used by digital banks:
|Barclays APIs||India, France, the US, UK, China, Brazil|
|Bank of Cyprus APIs||UK, Russia, Cyprus, Greece, etc.|
|Banco Bilbao Vizcaya Argentaria (BBVA)||European Union, USA, Argentina|
|Deutsche Bank APIs||USA, European Union|
|Citi APIs||Mexico, USA, UK, China|
Consequently, you will need the assistance of a technology partner who can help you make the right API platform choice. Here are some of the important checkboxes that your API Integration vendor must fulfill:
At the end of the day, digital banking cannot rely upon API integrations alone. Banks should look forward to creating sustainable financial ecosystems with their technological partners, in order to remain profitable in the years to come and to surpass customer expectations. The assistance of experienced partners who can provide end-to-end digital transformation solutions that include API integrations is invaluable.
This article was originally published at https://www.indusnet.co.in/why-api-integration-is-a-must-for-digital-banking-growth-in-2019/