Five ways payments will be different in 2024

November 24, 2015
/   Voices

Predicting the future of cash and card payment volumes is arguably a fool’s errand – but Payments UK, Britain’s new trade organisation for the industry, is in a good place to have a go...

Contactless cards: Opt-in or opt-out?

/   Voices

Australia is toying with the idea of creating an opt-in function for contactless cards, in a move that highlights the problems around coping with new payment technology and how fraud risks are handled.

Five EMV lessons for the US

/   Voices

The EMV liability shift has occurred in the US, so what can we expect to see happen in the coming months and years as a result of this change?

Open to Change: The API Factor

It’s a simple acronym—API—but it means so much to every industry. And for banking professionals in particular, it means even more.

Cause and Effect: If you build it, will they come?

July 23, 2014
/   Spotlight

Many financial institutions assume that digital banking is lucrative because the most valuable customers happen to bank online. While there is certainly a correlation between online bankers and higher profitability, quantitative evidence suggests that...

Fast Facts: Student Loans

January 22, 2013
/   Insights

The Financial Services Roundtable recently released another iteration of its Fast Facts, reliable, bullet-point research about issues facing the financial services industry. Topics span TARP, Dodd-Frank, insurance, lending, retirement savings and more.  Below are some updated Fast...

Intuit 2020 Report: The Future of Financial Services

April 11, 2011
/   Insights

Today, Intuit released the latest edition of the Intuit 2020 report, Intuit 2020 Report: The Future of Financial Services, which identifies and examines four key trend areas that will  transform the financial services industry...

The Top 10 Trends in the Digital Banking Industry

December 18, 2013
/   Spotlight

2014 is rapidly approaching and as the year wraps, the Digital Insight team has pulled together the top 10 trends in the digital banking industry based on data and trends from studying financial institutions....

Making Banking Fun: Gamification in Financial Services

August 5, 2013
/   Insights

Recently, the team sat in on American Banker’s webinar, “Gamification in Financial Services: Five Proven Ways to Get an Edge,” which shared how leading brands in financial services have applied gamification to reach...

Technology M&As: The Beats Go On

May 29, 2014
/   Insights

The ongoing fascination with Apple’s $3 billion purchase of Beats Electronics is entirely understandable, because it’s a cool story. However, it also says a lot about what’s going on between finance and tech.

Small Business: Perception vs. Reality

November 21, 2012
/   Insights

In the most recent election cycle, like most others before it, the one sector of the economy that got the most attention was small business.  This is the future, we were told by every...

What We’re Reading

May 5, 2011
/   Spotlight

Below are interesting stories the staff has been reading over the past week. What have you been reading? Let us know in the comments section below. Virtual Banking Worlds Provide Tangible Lessons American...

What We’re Reading: Thanksgiving Edition

November 22, 2012
/   Spotlight

Below are interesting stories the staff has been reading over the past week. What have you been reading? Let us know in the comments section below or Tweet @bankingdotcom. Mobile Thursday? Plans for Thanksgiving...

It’s a simple acronym—API—but it means so much to every industry. And for banking professionals in particular, it means even more.

For the record, an API—or Application Programming Interface—is basically a set of protocols that allows one software program to talk to another. It’s used to create specific kinds of functionality that other apps can draw on, which makes it the foundation for every kind of software development. And in the digital age, it’s the ultimate tool of transformation.

Again, it all sounds so simple, but there’s at least one big complication. When we talk about APIs, we mostly mean open APIs. And for an industry built on the twin foundations of confidentiality and compliance, that’s one gigantic giant issue.

To be sure, many companies and industry groups in financial services have launched aggressive initiatives driven by APIs. For example, as covered in this space last year, organizations like Square launched integration programs that allow transaction data from one provider to be fed directly into the cloud-based financial records maintained by another provider. The ease with which these diverse business applications move data into ledgers securely and swiftly is enabled in part by the APIs at the center. And way back in 2012, Intuit opened the APIs to its financial data service in the U.S. and Canada, specifically to nurture the next great killer finance apps. That was a first for the company, and it definitely represented a new era of openness.

Just this year, Citibank—which has become a strong advocate of using the developer ecosystem to power innovation—launched the Citi Mobile Challenge. This is billed as a “virtual accelerator with a robust curriculum and mentorship program aimed to inspire developers to reimagine mobile banking.”  Citi wants to give developers the opportunity and tools to solve financial problems and change the way people everywhere bank.

In September, the Danish multi-asset trading and investment firm Saxo Bank announced that it would open access to its trading infrastructure with the launch of OpenAPI. There are plenty more examples, but the questions is remains:  While the changes are surely coming, are they coming fast enough?

The very idea of granting access to an institution’s most prized assets—a basic tenet of API-driven advancements—makes many in the industry queasy. Compliance is a major factor too: There’s a welter of regulatory mandates to ensure data security, and opening up the vaults seems to invite problems and subsequent litigation.  That’s why it could be argued that while there’s been some action, there’s the potential for a lot more.

Many companies, particularly on the technology side, are stepping up. The newest of these is #FintechRevolution API Ecosystem, an industry-wide initiative that connects fintech developers with best-of-breed financial APIs. Championed and promoted by Xignite, a provider of market data cloud APIs, the initiative already boasts support from 21 vendors that provide workflow, analytics and data APIs. The goal is to inspire a new generation of financial applications, specifically by assembling the best APIs in each market category. The members have committed to sharing research and data, marketing best practices, and joint events.

While this kind of ‘coopetiton’ is old hat for the technology industry, it’s still uncomfortable for some in finance. It’s the concept of ‘open’ that stands as an obstacle—it flies in the face of tradition in an industry that has built its reputation on stability and security. But there has already been headway in other markets: Check out the Open Bank Project, which foster the maxim of “transparency as an asset.” The goal here is to serve as an open source API and app store, in this case mainly for German banks, to support initiatives to rapidly enhance their digital offerings through an ecosystem of third-party applications and services.

AP-enabled innovation isn’t a fad; it represents a new way of leveraging existing assets, not diluting their value. Moving forward, it could even support changes in business models, such as from full-fledged investment services to individual offerings.

A year from now, how different will things be? How many financial services institutions that currently don’t have API programs will be knee-deep into them going into 2017? It’s an open-ended question, just as this field deserves.


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James W. Gabberty

Gabberty is a professor of information systems at Pace University in New York City. An alumnus of the Massachusetts Institute of Technology and New York University Polytechnic Institute, he has served as an expert witness in telecommunication and information security at the federal and state levels and holds numerous certifications from SANS & ISACA.

Brad Strothkamp

Marisa Mann

Marisa Mann brings over 15 years of experience in consulting and financial services industries to the Solstice team, working on large scale enterprise initiatives across many technologies, including specializing in the digital space – Internet and mobile. Mann is passionate about mobile and the endless possibilities for the enterprise, delivering business value through strong brand recognition and driving to excellence in the consumer experience. Prior to Solstice, Mann worked at JP Morgan Chase, Diamond Management and Technology Consultants, Washington Mutual, Inc, and Accenture.

Zachary Ehrlich

25-year-old writer, and as a native San Franciscan, I am unreasonably loyal to Bank of America, if only for their superhero-like origin story, involving the 1906 earthquake and Italian fruit vendors.