Significance of API Economy and Open Banking (Part-1)

Digitization journey of a Bank starts with building Digital Skeleton, and one of the most critical aspects of it is building an effective API Ecosystem. And when I say “Effective” – it starts with a holistic integration strategy, a robust architecture that caters to security & regulatory requirements, a governance model that not only addresses current requirements but can be extend to the future needs.?

APIs are a digital glue holding the IT systems of an Enterprise; hence API Economy plays a significant role in the digitization journey of a Bank. It is instrumental in integrating Banking IT ecosystem with various internal & external systems and the digital channels. Banks that create and maintain a true API Economy can exploit significant competitive advantages.?

The advent of the API economy has essentially revolutionized the way banks and FinTechs work within the financial services industry. While API technologies are not new, but the disruption in the financial industry that started recently compelled the banks and finance industry to gear up for the API Economy and Open Banking revolution. Some big banks who are frontrunner in the digital journey have made themselves equipped with a very good integration strategy & infrastructure; but there are a huge number of small and mid-size banks across the globe still figuring out the optimal path to reach there.?

Download full whitepaper -?https://whitepaper.allieddigital.net/FinoAllied

Although APIs are a great way to connect one system with the other, but the story doesn’t end there for a highly regulated institution like bank. It needs some more ingredients to build that robust and extensible API ecosystem.?

APIs can be considered as effective multipurpose tools that enables the implementation of a true Open Banking Ecosystem. Open banking APIs are valuable assets to the banks & financial services, since it allows them to –?

• Improve service offerings
• Enhance customer engagement and?
• Create new digital revenue channels

?An efficient API infrastructure enables the legacy banking systems to transact with the external world and expose variety of products and services to their customers through different digital channels. In this way, the banks can even leverage the innovations of the FinTech startups and move beyond the traditional definitions of banking. With open banking API strategy, banks can give the opportunity for FinTech startups to create innovative solutions and plugin to bank’s IT ecosystem. I feel it’s a best way of encouraging innovation and creating business value from the same.?

Download full whitepaper -?https://whitepaper.allieddigital.net/FinoAllied

In this entire landscape, just to organize the things in a better way, an Enterprise Service Bus (ESB) or an API Gateway essentially plays a crucial role. Enterprise service buses?(ESBs) can be defined as software architectural patterns used to develop and implement communications among software applications that are mutually interoperable within a service-oriented architecture, SOA. An ESB, is an architectural pattern in which a centralized software component (an ESB product) enables the integration of applications. The architecture supports some core features like - Application Integration, Data Integration, and automation of business processes in Orchestrated manner. The Enterprise Service Bus is a standardized integration platform combining Messaging, Web Services, Data Transformation, and Intelligent Routing for reliable connection and coordination of interactions between a large number of heterogeneous applications. An ESB platform is also expected to maintain transactional integrity while performing such functions.????

Read Full Article - https://engatica.com/blog/significance-of-api-economy-and-open-banking-part-1?contentId=62b0d5896c1e7974571ef972