Evolving your infrastructure is all about the acceleration of delivery and extending fintech capabilities into areas of your ecosystem where it was once challenging or even impossible.
By building a better ecosystem, you can reduce costs, comply more easily and effectively with regulation, and – ultimately, provide better services to your clients, whose demands are constantly evolving.
A key enabler is the broader usage of Application Programming Interfaces (APIs). APIs have long been used within financial institutions and corporations to exchange data and request certain functions. However, with the rise of RESTful APIs, communication between the financial infrastructure and third-party applications has become simple and efficient, enabling the traditionally closed financial system to become more open than ever.
The 2021 FIS Readiness Report shows this playing out across the financial services landscape. Nearly a third of capital markets firms say their competitive strategy includes making their data more accessible for clients via open APIs. And 36% of finance leaders in corporations say the same.
Meanwhile, Forbes found that 72% of the top 50 global banks have invested in the creation of API platforms.
We’ve also seen the rise of business models like Banking as a Service (BaaS) and embedded finance – where non-traditional financial services companies are embedding finance into their ecosystems. Think Uber and Apple with their credit cards or Google and its upcoming checking account launch. Estimates say this market will generate upwards of $230B in revenue by 2025, up from just $23B in 2020, a 59% CAGR.
You’ll also start to hear a lot about “platform business models.” These are business models that create value by facilitating connections between two or more groups, such as consumers and producers – like Facebook or Alibaba. They require large, scalable networks of users and resources that can be accessed on demand.
All of this is possible given the increased investment in APIs and adoption of new FinTech.
And by transforming your ecosystem into a platform business model, you too can expose existing and new functionalities to participate in the market, partner with FinTech firms to enhance and monetize new services and, most importantly, extend your position across the value chain to increase your share in the markets you serve.