{"id":2163,"date":"2019-12-30T03:35:38","date_gmt":"2019-12-30T00:35:38","guid":{"rendered":"http:\/\/kusuaks7\/?p=1768"},"modified":"2024-02-01T10:40:29","modified_gmt":"2024-02-01T10:40:29","slug":"open-api-whats-whys-and-hows-of-api-deployment","status":"publish","type":"post","link":"https:\/\/www.experfy.com\/blog\/fintech\/open-api-whats-whys-and-hows-of-api-deployment\/","title":{"rendered":"Open API: WHATs, WHYs, and HOWs of API deployment"},"content":{"rendered":"\t\t
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\n\t\t\t\t\t\t\t\t\tPSD2, a new banking directive, will undermine the old banking system to bring a new competitive and more transparent market to life. Banks struggle to soften some negative ramifications of the shift and leverage API, their new weapon, to retain the clients and take banking services to a new level.<\/i><\/b>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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PSD2 brought up much havoc into the banking business. The new directive obligates the banks to provide third parties (account-information service providers and payment initiation service providers) with access to customer transaction accounts. Today, as such data becomes available subject to certain restrictions, qualified third parties are enabled to provide financial services at a scale comparable to that of established banking institutions. In the EU\u2019s view, this is done to create a single integrated market for payment services by standardizing the regulations for the banks and for the new payment service providers <\/em>(Nexus<\/a>).<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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Along with a more transparent and secure financial market, PSD2 will induce some unfavorable ramifications for the industry players as it also promotes a higher competition. Increased pressure on pricing and margins is a top concern for bank executives as they plan for the implementation of PSD2,<\/em> McKinsey report<\/a>s. Unexpectedly, in their pursuit of new revenue streams banks are well assisted by fintechs and software industry players. Once competing leagues are now allies in the face of a broad digital transformation of the banking sector.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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What is an API and why banks need it<\/h2><\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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It wasn\u2019t until PSD2 that the history of banking started mentioning APIs. Under the new directive, European banks must have an adequate interface allowing access to the account information for third parties. At this point API kicks in.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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What is an API? It is a software intermediary that allows two applications to talk to each other<\/em> (MuleSoft<\/a>). In technical terms, API is a code \u2013 a set of routines, protocols, and tools – that governs the access point(s) for the server <\/em>(Medium<\/a>). It is a password that grants access through the server straight to the databases. In plain language, it is a key to the door behind which a database is hidden. Without the bank\u2019s API, a third-party wouldn\u2019t access the client\u2019s account data. As a result, a client won\u2019t be able to pay his\/her utility bills otherwise but via a banking system. This is just a single example out of dozens of transactions that non-banks will be eligible to do under the new directive. All in the name of the transparent and competitive market.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Opportunity, not a danger<\/h2><\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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Mandatory APIs sharing, strange as it may seem, will be a well-anticipated spiral turn for many financial market players. According to the mentioned above report by McKinsey, many executives report that they view PSD2 compliance as part of a broad digital transformation<\/em>. Instead of perceiving the forthcoming transformation as a knockdown, PSD2 will be a gentle push. This is what the industry gasped for a long time to build new processes, acquire new skill sets, and realign the organizational structure around data collection and analysis.<\/em><\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Service improvement<\/em><\/strong><\/h3><\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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API deployment allows banks to extend and improve their products and services. Open API enables easy integration of other market players with the strategic partnerships lying in the core of many successful endeavors. Banks may lack internal resources, expertise or funds which are required to launch an app to hook in millennials, X and Z-generations. However, backed by fintech startups, in exchange for banking data and infrastructure they can get a top-notch product that sells out.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Customers\u2019 engagement<\/em><\/strong><\/h3>\n<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Open API reinforces client engagement and brings new ones. In liaison with the fintech companies, banks instantly adapt to ever-shifting clients\u2019 needs. Picture a scene where Bank A boasts a super convenient and user-friendly P2P money transfer system. Bank B easily adopts the best practices of Bank A using its Open API. As a result, Bank B boosts its revenues and engagement rates by leveraging the system that was refined by the previous owner.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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New revenue streams<\/em><\/strong><\/h3><\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Banking data and infrastructure cost a lot. Now, as we have API bank can grant a qualified party secure and regulated access to its system to the extent that is necessary for such party to make use of bank\u2019s data\/services. Thus, new revenue channels are created which the bank would not have otherwise.<\/p>\n

Related video: API – What is…<\/a><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Tips and tricks for successful implementation<\/h2><\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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What does a bank need to leverage the benefits of API implementation? Expertise from a third party will do. \u201cHow do I know I\u2019m offered the right thing for my business?\u201d – a CEO can rightfully ask him\/herself. With this in mind, we\u2019ve made up a cheat sheet for a bank willing to unleash the power of API implementation involving assistance from a service provider.<\/p>\n

The road map along with API features below are tailored based on the experience we obtained elaborating Open API for <\/em>Standfore<\/em><\/a>, banking platform by Qulix Systems.\u00a0<\/em><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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For a good start, draft out a project road map. This may not be an all-inclusive one but should cover strategic imperatives for your API.<\/p>\n\n