SPONSORED CONTENT PRESENTED BY FINASTRA
The COVID-19 crisis has fast-tracked innovation and the digitalization of processes in the banking sector—but it is not the “Black Swan” event it may first appear. Banks face the ongoing challenge of being prepared to respond to cycles of change and crisis. Yet, Finastra’s global survey reveals more than two-thirds (67%) of banks feel they are still being held back by legacy systems.
These unprecedented times have accelerated the need for innovation, and corporate banks have risen to the challenge. Almost three in four (72%) banks have seen an increase in the integration of corporate banking APIs since the outbreak of COVID-19.
Innovative banks that are tapping into open APIs to offer new products and services are extending their market lead. There is a real divide between the innovators and those that are increasingly being left behind. As the innovation gap widens, the survival of the left-behinds is far from guaranteed. The implications of our research are stark. Banks need to drive digitalization, not just to achieve cost efficiencies but to be ready to respond to change and compete in a fast-moving sector.
Barriers to open banking
Across the globe, the factors holding back organizations when it comes to moving to open corporate banking APIs are:
- Security concerns—both proprietary customer data and risk of cyber attacks (51%)
- Legacy infrastructure limitations (48%)
- Lack of in-house knowledge/expertise (44%)
Often-cited barriers to moving toward open APIs, such as lack of buy-in from senior leaders (37%) and not seeing any benefits for the bank (31%), are not generally the main issues, except in the U.S. where respondents cite the issue of lack of buy-in from senior leadership as the major barrier.
A single API standard could be the key to unlocking opportunity
Approximately two-thirds of corporate banks (67%) are still being held back by legacy systems. Senior peers across the globe widely believe their organization needs to see fundamental transformation towards a flexible and modern IT infrastructure to allow effective movement to open APIs.
The second most common mentioned requirement to support effective transition to open APIs is stronger/more progressive regulations (51%). There is, however, a significant regional variation. 63 percent of US decision makers said stronger/more progressive regulations were needed but European counterparts did not think this was as much of a priority, with only 37% calling for better regulatory support.
As the open API ecosystem takes shape, standardization will be key to how it develops. Almost half (47%) say they need a single API standard in their geographic region.
Download Finastra’s Infobrief Corporate banking: Benefits of moving to open APIs
This infobrief discusses a survey across almost 150 banks looking at the benefits of open APIs, and how banks can best adopt them to embrace change successfully versus the competition. Download now to discover what we learned from other banks including:
- Corporate banking strategy focus
- APIs and the innovators
- Weighting up the pros and cons of open APIs
- Benefits of moving towards open APIs
- Changes needed for an effective transition