Bridging the Gap

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Specialty software emerges to connect disjointed internal and external systems

By Collin Canright

So many community bank software systems from different vendors or different technologies are tethered together, like a digital patchwork quilt. Sometimes a community bank IT director’s job of supporting those systems feels like sewing software systems together to get the data his or her bank needs to innovate and serve its customers.

Software that directly connects banking and financial applications may provide all or part of a solution to tailor a bank’s own software to its own internal needs. Called application programming interfaces, or APIs, these software systems and code specifications make real-time, application-to-application connections that can help community banks gather and use the data they need from various systems.

API software can connect both internal systems to external applications and internal systems to other internal systems. The use and development of Web-based API applications is partly responsible for the ability of nonbank payment providers to quickly and easily develop data-dependent services, as APIs related to banking have become increasingly prevalent, banking software experts say.

For example, API software can enable the development of mobile, social and cloud-based services, which can help engage customers who primarily use mobile devices. Within this broad category are two external and internal API software uses of interest to community banks. First, bank customer APIs can give customers additional functions, likely through a mobile device, and better access to their data. Second, third-party customer APIs can give data aggregators and other bank customer service providers access to necessary bank data.

APIs themselves are not new, says Alan Glickenhouse, API management business strategist in IBM’s software group in Poughkeepsie, N.Y. These software systems are part and parcel of how a programmer instructs an operating system, for instance, to provide information from one software application or hardware system to another. API applications are most relevant to developers of commercial software systems. Many banking systems use API software to connect internal or hired developer systems.

By connecting multiple systems, API software could provide a 360-degree view of a customer’s business by pulling relevant data into a new system, Glickenhouse says. “The initial driver for API initiatives is often to enable customer engagement,” he says.

Glickenhouse provides a number of API-driven mobile apps that a community bank could develop:

  • Branch/ATM locators. As a mobile app using GPS data, customers could search and find an ATM or branch near their current location, with directions and contacts.
  • Lending rates or eligibility calculators. Current mortgage rates connected to eligibility calculators, using a customer’s current data could result in appointments. Local rate comparison features also could be built in.
  • Reward points management. Banks with rewards-based cards could push a customer’s current total to a mobile app.

Gartner Inc., a technology research and consulting firm in Stamford, Conn., projects that the top 50 banks will all provide API software access to services by 2016. Increasingly, core-banking providers used by community banks offer API software access, especially to data contained in check images and account statements. Some community bank core-system providers already use APIs to allow banks to customize bill payment services for their customers. Other software companies are developing API software to enable banks to connect their internal systems to one another, third-party providers or possibly large commercial customers.

Standard Treasury, subsidiary of Financial Tech Inc. in San Francisco, for instance, began building and maintaining API software for banks, offered on a subscription basis. Other firms are following suit.

The real power of API software lies in providing additional services for customers and data to customers. The newest use of APIs is to provide public access to private programming interfaces so that software systems can be connected for a real-time, “always on” basis.


Collin Canright is a financial writer in Illinois.

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