A recent Gartner® report, Assess the Use of Banking API Standards for Competitive Advantage, explores the idea that as open banking regulations continue to grow worldwide, creating APIs for only compliance can lead to poor API uptake and limited business value. “Bank CIOs should set the vision for differentiating API products that go beyond regulatory compliance, including leveraging standards such as BIAN and FDX.” This blog post includes our main takeaways.

Moving Beyond Compliance: Secure and Competitive API Solutions

1. APIs as a Secure Alternative to Screen Scraping

Third-party fintechs often rely on screen scraping to access banking data, which increases fraud risks and compromises user credentials. By adopting FDX and other API standards, banks can provide a controlled, consent-driven data-sharing approach that enhances security while ensuring regulatory compliance.

2. Monetized API Marketplaces for Competitive Advantage

API marketplaces allow banks to showcase their API products to a broader ecosystem of partners, fintechs, and enterprise clients. Banks can monetize APIs through subscription models, transaction fees, or value-added services.

3. Real-Time Corporate Banking APIs

Corporate banking clients increasingly demand real-time access to financial data, yet many banks still rely on batch-file processing. Transitioning to real-time APIs allows banks to:

• Streamline transaction processing and reconciliation

• Enhance cash flow visibility for business customers

• Offer premium, event-driven banking services through webhooks and streaming APIs

4. Partnerships for Digital Innovation

Strategic partnerships between banks and fintechs can drive digital transformation. Banks can integrate fintech solutions into their services through APIs, offering customers a seamless experience without building everything in-house. According to the Gartner report, “with banks lacking API maturity, the increase in banks recognizing fintechs as strategic partners to close their API and digital capability gaps rose to 89%.”

Implementing a Future-Ready API Strategy

To gain a competitive edge, CIOs should:

• Invest in API Management and Security: Deploy full-lifecycle API management platforms and identity solutions like Curity to enforce consent-based access and secure authentication.

• Standardize and Scale API Offerings: Adopt global standards such as ISO 20022 and BIAN to ensure interoperability and reduce development overhead.

• Foster an API-Driven Culture: Establish API product management roles and promote collaboration between business and IT teams to continuously enhance API offerings.

Leveraging APIs as Strategic Assets

Banks that view APIs as strategic assets rather than compliance burdens will secure a significant competitive advantage in the evolving financial landscape. By delivering secure, scalable, and monetized API solutions, banks can foster customer loyalty, drive innovation, and position themselves as leaders in the digital financial ecosystem. Access the report here.

Gartner, Assess the Use of Banking API Standards for Competitive Advantage, Don Free, Andrew Humphreys, 6 May 2024

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