Until recently, financial services were dominated by the urge to avoid risk. Nowadays, it’s all about the customer and about experience. The drive towards customer experience has forced banks, insurance companies and other financial service providers to go digital fast. This trend has been accelerated by the breakthrough of FinTech players in the market, and also, of course, by COVID-19. The agility required is at odds with the legacy infrastructure at traditional banks. Software in general, and APIs in particular, are the solution to propel financial service providers into the future.
Digitisation has changed consumer attitudes forever. The way we consume entertainment has changed, the way we shop has changed: everything has gone mobile. Financial services have to follow that trend. Not only do customers assume that onboarding – as a new customer – will be seamless, they also expect to find financial information and services at their fingertips. This requires financial services companies to make data more easily available and to develop new applications more swiftly.
Open banking: challenge and opportunity
This openness has also become an obligation, since the PSD2 regulations force banks to exchange customer data with third parties. Fortunately, banks are turning this challenge into an opportunity, by building digital ecosystems that complement their own services with third-party applications in order to offer customers a broader portfolio of services. As Jean-Louis Van Houwe, president of FinTech Belgium, explained during a recent 4C webinar, traditional banks have taken the opportunity to partner with FinTech players and are now sometimes offering over 30 different services through their mobile app, ranging from financial services to spending meal vouchers, buying parking tickets, paying for public transport, etc.
APIs as the glue between old and new
This would not have been possible without the advent of API technology, Application Programming Interfaces. These APIs unlock the data hidden in the closed systems that financial services traditionally have, and allow banks and insurers to connect new applications to their back-end systems, regardless of whether these are third-party services, or their own services. At 4C, we partner with MuleSoft for APIs. MuleSoft’s API-led connectivity platform Anypoint allows the IT department to develop APIs and manage their entire lifecycle while also taking care of connecting the APIs across the different layers in their organisation. Financial services companies can use Anypoint to leverage the power and data of their existing infrastructure, thus protecting their investments. What’s more, once functionality is built in in the form of an API, it can easily be reused, saving precious development time.
APIs at work
HSBC is one of the banks that used MuleSoft ‘s API platform to build the bank of the future. By making the APIs available to business partners such as real estate agencies, the latter can, in turn, offer their customers a seamless experience of buying a house and getting a mortgage with HSBC, without going to HSBC itself. To the customer, this is all fully transparent. The bank is hidden but delivers services through its ecosystem.
At another Mulesoft customer, Farmers Insurance, APIs are used to digitise insurance claims and payments. A claimant can take photographic evidence of a damaged vehicle and upload it directly in the Salesforce application. The claim adjuster can look at the evidence of the damage, estimate the claim value and pay it directly to the claimant or even to the garage performing the repair work. All the connections are made through APIs, which unlock the internal systems of Farmers Insurance and provide customers with an excellent customer experience.
Bridging the differences
The challenges for banks, insurance companies and other financial services organisations are huge and they have to strike the right balance: the balance between being very safe and very agile, between protecting investments and innovation, between being open and being secure, etc. Software, and APIs in particular, are bringing the solution and offer the best of both worlds to the financial services industry.
Interested in finding out more? Then listen to our recorded webinar. Or contact us for more info.