OBSERVATIONS FROM THE FINTECH SNARK TANK

The number of application programming interfaces (APIs) used in banking is growing, and it’s time for banks—even (and especially) those that rely on vendor applications—to get a handle on their API strategy.

The Growth of APIs in Banking

According to a 2020 McKinsey survey on APIs in banking, roughly three-quarters of banking APIs are used for internal purposes, and banks plan to double the number of internal APIs by 2025.

About one in five banking APIs are considered “external,” used to support integration with business partners. Banks plan to double the number of these APIs by 2025.

Finally, 5% of banking APIs are “public,” used by external developers for open banking purposes, including revenue generation and participation in ecosystems. According to the McKinsey study, banks expect to triple the number of public APIs they have in use by 2025.

The distribution of APIs across the three types reflects banks’ API priorities. Reducing IT complexity through internal APIs was the top objective, followed by enabling agility and partners. Sadly, “innovation” only made fifth place.

The API Challenge in Banking

A study from the European Corporate Governance Institute asserts: