APIs to Drive Banking-as-a-Service Growth in 2022

Amid the pandemic, banks have had to get creative to meet customer demands for new products and an increasingly digital experience.

Matt Naish, Head of Product Strategy at FISPAN, told PYMNTS in an interview that application programming interfaces (APIs) are key to helping financial institutions (FIs) build the online products they need to meet customer demand.

To streamline innovation, the percentage of banks and credit unions (CUs) that have invested in or developed APIs increased from 35% in 2019 to 47% in 2021. An additional 25% plan to invest in or develop APIs. API in 2022.

See also: How the Growth of Open Banking Affects the Outlook for Business Banking

Moving to the next generation of digital banking means it’s becoming increasingly important to differentiate between digitizing an existing product and wholesale reinventing it.

Or, as Naish put it: “Digitization isn’t really about making a standard paper form available online; it’s actually a redesign of the customer journey. »

This gives banks a significant opportunity to redefine how they interact with customers, automate processes that can be automated, and free up resources to improve customer service and one-to-one interactions.

“Let bots do what bots do best, and let humans do what humans do best – with a level of customization and great service,” he said.

Push and pull into the future

There is a push-pull dynamic that drives the financial services ecosystem towards innovation, he said. Customers demand more from their FIs and therefore drive these companies into new cycles of product and service development. And when it comes to delivering new digital experiences, banks need to meet people where they want to be met, on the devices they use most often.

APIs are the common denominator underpinning it all, he said.

“There’s a lot in those three little letters,” Naish said. “APIs have grown far beyond the initial definitions and usage – where it was simply a matter of transferring things from one computer to another.”

Banks can use APIs to set up the proverbial plumbing enabling new digital experiences, where, for example, data can be consolidated into data lakes and, at a high level, bring digital experiences to life. -he declares.

See also: Open Banking APIs help business customers “in, out and in”

Creating these comprehensive digital experiences can come through in-house development or through a partnership model, Naish said.

“You can tap into all parts of the ecosystem,” he said of banks.

APIs and streamlined development can also level the playing field, so to speak, in markets that may have already been burdened with legacy infrastructure.

The rise of Open Banking and BaaS

As open banking (in its regulated and unregulated forms) takes root, Naish said FISPAN will continue to develop its API platform in partnership with FIs. FIs that pivot and scale their innovations, with faster time to market, will have a first mover advantage in shaping open banking and Banking-as-a-Service (BaaS).

A growing number of banks are developing BaaS strategies, Naish noted.

For business entities adopting BaaS, there is an opportunity to build customer loyalty among individual customers and business customers.

As Naish told PYMNTS, “If you build a model where you’re able to not only deliver your own digital offering, but also offer it to other entities, that’s a winning strategy for a number of different institutions.”



On: Seventy percent of BNPL users say they would prefer to use the installment plans offered by their banks – if only they were made available. PYMNTS’ Banking On Buy Now, Pay Later: Installment Payments and the Untapped Opportunity of FIssurveyed over 2,200 US consumers to better understand how consumers view banks as BNPL providers in a sea of ​​BNPL pure-players.

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