It has taken financial institutions a long time to see the technical and financial possibilities of using banking APIs, but recently they seem to have reacted, with several banks launching projects in this area.
Kristin Moyer, director of research at Gartner, stated that in 2012 "banks must transform themselves to continue to be profitable and relevant in the financial services value chain: applications stand in the way in the banking sector, as they are rigid and reactive". In response to this, the Gartner report proposes the use of web APIs: "This new focus will allow banks to provide relevant services, based on the context, location and technology of customers". All this in October 2012.
APIs (‘Application Programming Interfaces’) are sets of rules that applications can follow to communicate between themselves, serving as an interface between different programs. APIs offer, among other benefits, a saving in costs: they make it relatively simple and inexpensive to implement the data from one application in another platform or service without having to reinvent the wheel. This technology also provides added value to the service offered.
Coming up in the distance, a slow move from the category of 'technological utopia' to that of a 'feasible business scenario', the vision of a future for banks as "software companies", to use the words of BBVA’s Chairman and CEO, Francisco González, at the last Mobile World Congress in Barcelona. A financial system converted into an interconnected digital ecosystem, resistant to turmoil and capable of occupying multiple market niches through opening up to third-party platforms.
A few months ago, Alan Glickhenhouse (responsible for API business management at IBM) discussed, in the IBM Developers blog, a classification of applications in which banks could make use of API:
1. Mobile apps development
● General information: this would be information not adapted to a specific customer using the app, but that provides data and news about what the institution offers (types of account, information on rates, cards, financial instruments, etc.).
● Personalized information and transactions: through information tailored to the customer (which would require additional security measures in the access system), the API could provide information on account balances, make transfers, pay bills, receive account alerts, etc.
● Mobile functionality: users who use the mobile app can use the functions on their device in conjunction with the bank's API, allowing them to use their camera (for example to deposit a check), NFC technology (to identify themselves at ATMs), GPS (to find the nearest branch), etc.
An API can allow a bank's partners to use its infrastructure to offer their services: shared-brand credit cards, gift cards, reward programs, etc. The API would also give partners real-time access to reports.
3. Public APIs
The same APIs that banks use internally and to work shoulder to shoulder with their partners can help them to gain new customers, fostering additional business through their integration in comparison facilities or in services focused on sectors.
4. Integration in devices
"The device most closely associated with the bank is the ATM. ATMs could be fitted with sensors for NFC communication and perform authentication [...] but perhaps we can take this a step further". Glickenhouse envisages a bank that could offer an API so that local companies can provide offers to customers in the area around the ATM.
5. Data Analysis
Banks have access to data on an aspect of great value to companies in other sectors: its customers' financial information. Thus, they could make profitable the provision of access to aggregate data.