The Connectivity Conundrum:
How FIs Can Stay One Step Ahead
Posted by Camellia George July 13, 2020 11:30 am EST
Another day, another new third-party solution that requires access to banking data.
For both retail and business banks, this means 1) a barrage of connectivity requests from high-value business clients that need to be addressed to stay competitive, or 2) the knowledge that the online banking portal is likely being “hit” by screenscrapers on a regular basis – an activity that has serious potential security consequences.
On the retail side, continued growth in the use of personal financial management (PFM) and wellness apps (substantially heightened by the current COVID-19 crisis, with a study by deVere Group showing a “massive surge” of 72% in Europe), has paved the path for the emergence of specialized apps for everything from microinvesting to peer-to-peer lending. With fintech companies receiving billions of dollars in investments annually, new players continue to jump on the bandwagon.
The same trends hold true for business banking. While investment in business accounting and ERP solutions continues to rise, we also see increased use of applications designed specifically for certain verticals. Organizations recognize that in order to get the most from these systems – which aim to streamline processes and improve decision-making – real-time financial data needs to be part of the equation. They’re putting pressure on their banks as a result.
How can financial institutions get a handle on this? For smaller FIs, the resources simply aren’t there to build and maintain all these connections. For larger ones, IT teams are likely tied to other critical projects and priorities.
But the issue cannot be ignored – customer experience and information security will be put in jeopardy without a solid connectivity strategy in place.
That’s where API platforms come in. Designed to simplify and accelerate connections to all these third-party solutions, they give banks a secure, no-hassle way to meet customer demands for open access to their banking data. Whether it’s a small business trying to incorporate its recent bank transaction data into its accounting environment, a global organization that wants to make financial data part of the complex workflows managed by its ERP system, or a consumer who simply wants a consolidated way to track and manage their accounts through a PFM tool, banks with an API platform can respond to all of those needs – quickly and cost-efficiently.
Choosing the right API platform is crucial. FIs will get the most from their platform investment by partnering with a vendor who offers direct connectivity to a broad portfolio that includes pre-built connections to many different type of solutions – PFM and wellness, treasury management, property/homeowners association (HOA) management, accounting, ERP, tax preparation, expense management, etc. Flexibility in how data is shared with these apps is also key, with platforms that are protocol-agnostic, supporting both industry standard protocols as well as custom APIs, delivering the most value.
Third party solutions are here to stay, and customer demands to access their banking data through them will only continue to intensify. You can stay one step ahead by getting a handle on your connectivity strategy with an API platform.