Orchestrated APIs help FIs speed up their digital transformation

Embracing APIs is a good start, now it's time to orchestrate them  

This is the second of a three-part blog series about how APIs are becoming increasingly instrumental for financial institutions.

Recently, we wrote a blog post that addressed the pressing need for financial institutions (FIs) to move beyond rigid software systems based on outdated COBOL coding and legacy banking siloes—and how with APIs there’s no need to “reinvent the wheel” by replacing existing systems. This allows FIs to keep up with technology that’s driving rapidly changing consumer demands for transactions to seamlessly flow across a variety of channels with each delivering the same exceptional and consistent service.

APIs enable FIs to more easily add new technology as quickly as possible and this blog focuses on going further by getting individual APIs to communicate with each other through API orchestration—and that’s important for a number of reasons, including the standardization it delivers.

The use of APIs in banking has been on the rise for years, but 2020 saw a huge increase with them playing a key role in digital-first banking during the pandemic. But, in many cases, the API rollouts weren’t smooth. The big uptick in APIs is particularly high in Europe because of P2D2 legislation. And as reported by PYMNTS, “A lack of standardization before PSD2’s implementation meant banks were working toward multiple objectives at the same time, which required app developers to ensure their products were compatible with dozens of APIs, hindering the latter’s adoption.”

But interoperability is just one of the important roles orchestration plays in the adoption of APIs in the financial industry.

What is API orchestration and why is it important for FIs?    

Just like a well-orchestrated group of musicians when APIs are connecting beautiful things can happen. And when they’re communicating together, they form a layer that then allows microservices to work on one network to automate processes and/or synchronize data in real time. This layer where orchestration takes place is called the abstraction layer and it’s where APIs get the intelligence they need to communicate between services and authenticate tasks. And orchestration is done in a sort of corralling manner, bringing together individual APIs from different places to provide new services. But how does that help FIs?

At a high level, API orchestration enables FIs to bring on new technologies and innovate more quickly—which in the current FI environment means meeting the demands of digital transformation and ensuring seamless connected experiences across all channels.                           

An example of simplified orchestration  

More specific benefits for financial institutions include:

Data transformation for consistency. From deposit slips and bank statements to transfer, loan applications and account opening forms, FIs handle many different requests using various formats. The API orchestration layer ensures payloads are correctly formatted transforming data so it’s consistent for all types for better organization and more efficiency.

Scalability for faster, safer deployment. With a containerized approach to APIs (bundling the application codes together so they run uniformly and consistently), developers can break out parts of the API and create new containers reusing and extending capabilities. This also makes it less time intensive for developers who make changes in a few simple steps, instead of many. The end result is faster and more secure technology deployments for FIs.

Runtime consistency for security and less errors. Consistency in the amount of time a program is running (runtime) is enabled with API orchestration by intervening at the microservices level for problem requests, then applying any changes before it reaches the backend. This gives FIs extra security ensuring protocols are standardized and data validation and error handling/logging is optimized so there’s increased operational efficiency and more protection against fraud.

Onboard new technologies more easily. One of the largest benefits of API orchestration is that it enables FIs to adopt new technologies more easily and quickly to their existing services so critical quick pivots like those that were needed during the pandemic aren’t as difficult. That way, they can increase their competitiveness and meet their customers’ expectations.  

Operational visibility to make adjustments. With API orchestration it’s much easier to keep track of the health of all your microservices, to trace and report any errors. And that brings transparency that exposes business metrics which FIs can use to make changes when they need to.

Go even further with API orchestration using continuous deployment    

Orchestrated APIs using modern software with a continuous deployment pipeline approach allows developers to make changes quickly and execute them with minimal effort. So, productivity improves, and they have greater efficiency for updates. And that enhances the ability to respond to changing market needs by implementing new concepts that can be built with continuous delivery to testing teams before being deployed to production. 

The idea behind continuous deployment is to make changes to an application and to deploy them to production as soon as possible, ideally in minutes or hours.

So continuous deployment does what it says: it enables FIs to continually work on enhancements, new services, updates and easily add them to the entire, well-connected, API communicating system. There’s no longer the need to take an application offline and deploy a new version—so there’s no impact to the end customer or impact on service availability, in fact FIs can count on the API orchestrated system’s services even more.

With APIs freely communicating, the future looks bright for FIs    

With the ability to easily bring on new technologies and have them working together on one abstraction level, API orchestration helps FIs accelerate their digital transformation, meeting customer demands and improving their operations. That way, it’s easier to gain a digital-first infrastructure that’s futureproofed—and strengthen the innovation of your brand.