The cloud computing revolution transformed the digital world, and infrastructure became software. Thanks to this evolution, the time and cost between idea and launch was slashed in half. For the financial services industry, cloud computing was the launching pad for both the Platform-as-a-Service (PaaS) – which enables already-established financial institutions to upgrade their pre-existing systems – and the Banking-as-a-Service (BaaS) – which allows not-necessarily-financial innovators to bring their own financial products to market – models.
While cloud computing and the BaaS model broadly benefit financial technology companies, these fintechs still face challenges around the need to find, negotiate and partner with each and every different service required to launch their businesses. Finding the right application programming interfaces (APIs) for authentication, customer journey analytics and fraud monitoring, as examples, can take months or even years.
Open APIs can solve the cost and time to market hurdles for fintechs by providing pre-negotiated APIs and services, letting innovators focus on launching instead of finding, negotiating, and integrating with partners. This set of pre-negotiated APIs functions like a digital gateway or a toolbox full of the features that fintechs need to bring their ideas to life. Imagine everything in one place – core integration, speedy responses through cacheing, fraud controls, and more partner APIs. Those building the future of financial services can quickly achieve their customer experience (CX) goals, which is a competitive advantage.
According to McKinsey research, “the three-year revenue growth (of over 12 percent) for the fleetest was nearly twice that of companies playing it safe with average reactions to digital competition.” Speed to market separates the winners from the losers.
A digital gateway is the key to frictionless engagement between people and their finances. Innovators are able to more easily make available competitive CX offerings, whether layered on top of core platforms and apps or offered as independent financial products. Utilizing an array of pre-negotiated APIs that take advantage of collective bargaining power with vendors through higher volume discounts, capability gaps like authentication and response time can be filled. From community financial institutions to neobanks, an open API digital gateway brings technology goals within reach by powering omnichannel customer use cases including funds transfer, transaction search, bill pay, account balance, fraud detection and reporting, to name a few.
Open APIs accelerate the trajectory toward the next generation of banking. A financial institution can modernize its service channels and deliver a top-notch customer experience without the time and expense of completely overhauling its entire core architecture. And barriers to entry, such as regulatory requirements, are overcome for new industry players wanting to get in on the action.
An open API digital gateway is built on a microservices architecture like Microsoft Azure, which facilitates continuous innovation in AI, blockchain, machine learning and more. It also supports a hybrid cloud approach to deployment of services, bringing together the cloud, the edge and on-premises architecture. Cloud-based microservices integrate to the core via the gateway, so the pieces of any puzzle are available to financial institutions – and fintech innovators have the opportunity to contribute to many different puzzles with just one product build.
While every banking core has its own language, a digital gateway offers an abstraction layer that translates communications between modern technology solutions and banking cores. As a result, the need for multiple, core-specific versions of a product is eliminated, and fintechs can more quickly scale to serve a greater number of banks and credit unions with different cores.
An open API digital gateway provides an edge in customer experience. Offering a new paradigm for partnerships, it enables faster time to market, future-proof development, “try and buy” for new capabilities, consistent APIs, higher discounts with aggregated volumes, and pre-negotiated contracts with best-in-class providers. The financial services game has changed, and a CX gateway is the cheat code to advance to the next level of banking, unlock unique adnatages and win.