Data keeps growing in importance in the financial services industry. consumers want to see more of it, financial institutions hold a lot of it, and fintechs want to tap into it. a collaborative banking model, where fintechs and financial institutions share information and products can create the most advantages for development and technological innovation but only if they clear data barriers.
A new study by Juniper Research found that customer data platform providers will generate $6 billion globally by 2027, rising from $1.7 billion in 2022; representing growth of 250%. The introduction of artificial intelligence-based services serves as keys toward unifying multiple data sources on a single platform; and reducing siloed data and centralizing enterprise access to customer data.
Customer data platforms help increase understanding into customer preferences through gathering and grasping data on transactions, browsing history and other online information. The new research urges customer data platforms to boost the range of integrations with third party vendors for greater access to consumer information.
Data Challenges
Much of the data difficulties, across industries but particularly in banking, derive from complex data infrastructures implemented with a patchy set of technologies and applications, leading to data silos that make it difficult to obtain customer information and insights in a timely manner, and that is easy to interpret and share.
Some potential data silos in financial institutions include customer portfolios, customer relationship management systems and transactional systems.
Another big challenge is real-time access to data, which allows financial services institutions to boost key initiatives, and improve operational efficiencies.
Extrapolating all data also helps financial institutions gain a complete picture of clients to deliver the right personalized services and an organization’s ability to retain existing customers, attract new ones, and create a competitive advantage.
Weaving Data Fabrics into the Process
Data fabrics enables organizations to bridge data silos and speed and simplify access to data assets. “Data fabric is an architecture that facilitates the end-to-end integration of various data pipelines and cloud environments through the use of intelligent and automated systems,” according to IBM.
Big Blue also found over the last decade, developments within hybrid cloud, artificial intelligence, the internet of things (IoT), and edge computing — a distributed computing framework that brings enterprise applications closer to data sources — “have led to the exponential growth of big data, creating even more complexity for enterprises to manage.”
This has made the unification and governance of data environments an increasing priority as this growth has created significant challenges, such as data silos, security risks, and general bottlenecks to decision making.
By capitalizing on data services and APIs, data fabrics pull together data from legacy systems, data lakes, data warehouses, SQL databases, and apps, providing a holistic view into business performance, suggests IBM. A data fabric abstracts away the technological complexities engaged for data movement, transformation and integration, making all data available across the enterprise.
API's Relationship with Fintech and Banking Data
The usage of APIs increased for fintech with the upsurge of open banking, whereby financial institutions allow third-party developers to access data stored by financial institutions to deliver enhanced services and functionality.
As customer demand increases for easy accessibility to financial data, financial institutions can use APIs to enable new digital experiences by consolidating information from data lakes, silos, warehouses, deserts and any other data locations.
Financial institutions nowadays have customers’ support to give third-party providers access to personal financial information, allowing for the development of apps and programs that make consumers’ financial lives less wieldy and more efficient. APIs make it easier for two-way interaction with banking customers on multiple channels. APIs also offer uniformity to users who want to query their financial institution’s data.
For fintech and financial institutions, APIs simplifies the communication between software programs and financial institution’s server. In addition, the use of APIs also allows financial institutions to offer their customers more services, such as the ability to integrate accounts or getting one-stop access to their banking and investment information.
Some banking areas benefiting from the availability of API-enabled data include payment processing, peer-to-peer programs, investment management, compliance and regulation. A number of third-party services utilize APIs to enable payment acceptance and in app transactions. Some other examples of fintech APIs include supplying credit history for loan applications, a real-time assessment of spending habits and payment bank card use, authorization and enablement of payments, access to checking account information, or the conduit to make an online purchase.
APIs Can Safely Drive Data Sharing
Certainly, most financial institutions still depend on intricate legacy systems. Consequently, leveraging APIs to extract the data and functionality rooted inside can be challenging, especially when competing with digital-only and challenger financial institutions.
In the last few years, APIs have grown from in-house tools to critical elements that link organizations and enable new application and system advancement. These technology ecosystems encourage open banking and data sharing.
The percentage of banks and credit unions that have invested in or developed APIs grew from 35% in 2019 to 47% in 2021, according to a PYMNTS.com study. Another 25% plan to invest in or develop APIs in 2022.
API solutions serve as easy on and off ramps to financial information superhighways. They also deliver to financial institutions and fintechs a faster time-to-market for open banking solutions.
NXTsoft’s OmniConnect Platform provides secure open APIs for the digital data infrastructure needed to build and scale any fintech application in banking, savings, wealth, financial wellness, and insurance. The business functionality offered by NXTsoft in tandem with the enterprise capabilities allow financial institutions to accelerate their API banking data accessibility.
The OmniConnect Platform provides a ready to go API Framework, letting financial institutions engage with fintech innovators, shape banking-as-a-service proficiencies and collect a fintech products and services, especially in the digital environment.
The platform includes the base functionality to authenticate, onboard clients and accounts, and store and process data, which all other APIs in the OmniConnect Platform can utilize. Many financial institutions, enterprise and government entities struggle to manage data loads, networks and data security. NXTsoft provides solutions to address those needs in the key areas of data connectivity, data security and data optimization.
