An Executive Insight with FISPAN Co-Founder Clayton Weir, who examines the role of APIs in the financial services industry, including the benefits of integrating with a FinTech API, and how open APIs can bring about greater adaptability and market reach.
Companies are pushing onward with digitizing their accounting processes, with one barrier being their software’s ability to integrate with outside data, such as their banking partners’. Integrating data into native processes is important to every organization’s digitization efforts, with 64% of companies reporting that they lack full integration between their treasury management systems (TMS) and their Enterprise Resource Planning Systems (ERPs).
APIs act like information intermediaries, not only helping businesses and their banks share information in real time, but are a secure means for data integration. FISPAN Co-Founder, Clayton Weir, shares more about APIs, why partnering with FinTechs can be more beneficial than developing in-house APIs, and the advantages of open APIs.
Read The Full Q&A Below
What is the biggest advantage for FIs in partnering with FinTechs rather than developing their own APIs in-house?
I think there are many advantages for FIs, and it really depends on where they are currently in their digital transformation strategy. For starters, banks are known to have legacy systems in place. Building upon those systems can be both costly and time-consuming. By partnering with a FinTech, FIs can utilize cloud-based open banking platforms to integrate [with] the FinTech’s API solutions, potentially saving both time to market and savings in terms of internal resource requirements. Integrating to a cloud-based platform is by far the better solution for an FI, and [FIs] would benefit from access to multiple FinTech providers and services. Additionally, when FIs use an established and tested integration from a FinTech, they can also reduce the risk and likelihood of faulty integrations [that] would have a negative impact on the customer journey and experience.
What are the advantages of FIs using open APIs to provide data to customers and partners?
There are many advantages FIs can gain from using open APIs, primarily being able to provide innovative and customized experiences for their corporate customers, which can really help to increase customer loyalty. Open APIs can allow FIs to quickly respond to changes in market demand and customer expectations, and — more importantly — attract new customers with their service offerings. API connectivity also allows banks to extend their banking solutions outside of their existing ecosystem and extend their reach to new markets and customers.
Banks can also incorporate open APIs into various product segment strategies, including payments, working capital finance, cash management and lending. By leveraging APIs, FinTechs and FIs can improve the user experience through embedded banking and new service offerings. ... Financial institutions can integrate their banking capabilities where their clients live, providing a holistic commercial banking experience.
How does a branded banking experience work within a commercial client’s banking and accounting software, and what kind of difference does that make for the relationship between the client and their FI?
Branded banking or embedded banking is essentially taking banking capabilities usually reserved for your banking portal and, with the help of open banking and APIs, inserting them directly where your clients live — in ERPs and accounting systems, for example. In this case, the CFOs, treasury managers and accountants of this business will experience a significant and beneficial change in their banking experience: [eliminating] dual-entry day-to-day payments and providing improved cash management visibility. [The bank is] improving their corporate client relationship by offering a more personalized and simplified user experience that they might not be able to get elsewhere. [The client is] seeing their business bank prioritize them and invest in improving their experience. Seeing your bank invest time, money and effort in you means they value you and your relationship, which again ties into customer loyalty and retention.
What advantages does an FI realize in terms of future updates and maintenance when partnering with a FinTech for API deployment?
The first step the FI needs to take is to pick the right FinTech partner with the end goal of achieving long-term advantages. When partnering with the right FinTech, the FI’s successes are also the FinTech’s. At FISPAN, we take a long-term view of our relationships with our bank clients and in turn take a hands-on approach to understand their relationship with their key clients. We work to strengthen both relationships and ensure value is being derived for all involved in the long term. These important details on updates and maintenance are also clearly determined ahead of time before the work even begins. At FISPAN, we are continuously innovating, and as we make updates to our products and services, our clients benefit from those added features.”
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Learn more about the current state of commercial banking in this free FISPAN report made in collaboration with PYMNTS.
More About Clayton Weir
Clayton R. Weir is the Co-Founder of FISPAN. He shapes FISPAN’s vision and execution, with an emphasis on people, product, and client success.
Over the last five years, Clayton has led FISPAN to become the market leader in embedded banking. FISPAN banking partners collectively hold $11 trillion in assets and include 11 of the top 40 banks in North America. Clayton is also the host of FISPAN’s If I Ran the Bank podcast, hitting on the hottest topics in banking, finance, and the future of payments.
Interested in how you can bring a more personalized customer experience for your commercial clients? Contact us for a demo to see how embracing open banking can help you maintain a competitive advantage.