With more companies actively embracing modern connectivity options, banks that offer access to outstanding APIs gives you a significant advantage when competing for new business – and it also helps you retain existing clients.
However, not all APIs are equal. When you embark on API development, it’s essential to provide APIs that will benefit your clients, rather than wasting time, effort and money on something substandard that could fail to impress new prospects, or even damage your existing relationships. So what can go wrong when you’re building bank APIs – and how can you get it right?
Building bank APIs: what are the risks?
Bank APIs can fall short in several different ways. If you build an API that doesn’t meet basic expectations – for example, if it lacks the requisite security, or fails to include sufficient historical balances – all you will have achieved is a waste of money, time and effort, as well as the need for future reworking.
That’s not all. If your API doesn’t meet your clients’ needs, you may struggle to achieve adoption. And if important components are missing – such as documentation, a developer portal or a sandbox with test data – the onboarding process may fail. Problems can also occur with testing and production, while some APIs may struggle to go live on time. All of this can result in reputational risks, and could even drive clients to change banks – particularly if their other partner banks have been more successful in building APIs.
Last but not least is the risk of mediocrity: if your API is simply not competitive with another bank’s killer trade finance app, it may simply not be worth trying to catch up.
3 things to consider when building bank APIs
There are many ways that bank APIs can go wrong – so how can you avoid the pitfalls and build APIs that will strengthen your client relationships and position your firm for success? Here are three key points you should bear in mind:
1) Build the right APIs. Consider which APIs will bring the most value to your clients and give you a competitive advantage in the market. The most commonly used APIs include cash visibility and payment status APIs – but there are also several ‘green field’ areas which you could target to achieve a competitive advantage, such as trade facilities, bank guarantees and notional pooling.
2) Perfect your data structure and flow. When building your APIs, make sure you have the right data structure in place. This means covering basic requirements, such as including sufficient historical balances. But you should also consider:
- Which messaging standards to use
- Which request parameters treasurers need
- Unique transactional identifiers vs. bank statement references
- How clients need to handle pagination requests
- Which data fields need to remain consistent across differing end points
- API documentation vs. PDF copies
3) Maximize performance and security. Getting the right security in place is essential, so consider all of the following:
- What sort of authentication processes are in place?
- Sufficient test data and scenarios in your sandbox and UAT process
- Throttling requirements for client performance
- Data security of sensitive payloads e.g. payments
- Individual vs. Batch payment requests for payments
- Entitlements required for authorization
In conclusion, creating APIs is key when it comes to maintaining an edge over the competition and ultimately, winning more RFPs. But if the results are substandard, the exercise can backfire – so take the time to target the right sort of APIs, structure the data correctly, and deliver the performance and security your clients are looking for.