With fintech start-ups often leading banks behind in the innovation stakes, APIs are increasingly being used to help lenders meet customer needs in a fast, efficient way.

The banking industry is ripe for disruption, coming under pressure from new regulations, such as Payment Services Directive 2, as well as fintech start-ups gnawing at the edges of their business.

Banks of all shapes and sizes are beginning to rewrite their technology as application programming interfaces (APIs), a tool that allows one software application to pull data from another.

Utilising APIs allows banks to be more agile, efficient and responsive to customer needs. While many may not have the heart – or budget – to perform radical surgery on their core systems, they can use APIs to close the gap between customer expectation and what can be delivered with legacy infrastructure.

Many are going a step further and carefully exposing their software code to external developers and companies through APIs. There is a dawning realisation that the fintechs are here to stay and opening up the banking environment is going to be critically important to banks’ future survival.

API adoption is integral to a bank's digitisation strategy. By enabling business services as APIs, a bank can revamp its internal development processes, as well as incorporate external innovative services provided by other companies.

However, concerns around security and setting up correct internal processes to manage external access still plague banks. To overcome this fear, they are turning to hackathons and providing APIs in ‘sandboxes’, where a bank can open up in a safe, controlled environment.

Hackathons can also play a role in changing the culture of an organisation. Many banks see surprising benefits from these events, which can be both fun and inspiring for a workforce. For example, in January, the Open Bank Project helped Ulster Bank run its third event in Dublin, which included the first 'hackaoke' – karaoke at the end of a hackathon. 

PLEASE ENTER YOUR DETAILS TO WATCH THIS VIDEO

All fields are mandatory

The Banker is a service from the Financial Times. The Financial Times Ltd takes your privacy seriously.

Choose how you want us to contact you.

Invites and Offers from The Banker

Receive exclusive personalised event invitations, carefully curated offers and promotions from The Banker



For more information about how we use your data, please refer to our privacy and cookie policies.

Terms and conditions

Join our community

The Banker on Twitter