Banks can be intimidated by FinTechs and APIs (application programming interfaces) or simply feel that these things are over-hyped, and they’re not wrong, Shields told Karen Webster in a recent interview. Yet no one is in a better position to leverage those innovations than banks, and Shields believes the right perspective will open their eyes to the possibilities.
“There’s a perception that everybody’s talking about APIs and everybody’s intrigued, but there’s still a lot of skepticism,” said Shields. “They’ve already lived through a hype cycle.”
“When we talk to financial institutions,” she went on, “it’s not to preach about the future; it’s to ask, ‘What are your clients’ frustrations and demands?’ If the compelling need is an enriched batch data exchange service for enterprise customers, that’s a great place to start a dialogue, and start a walk toward real-time exchange with SMB clients.”
Banks don’t ask for APIs, said Shields. They struggle even to imagine what APIs mean. For them, “API” is shorthand for a host of other jobs that need to get done. Solving the hard problems around data exchange, service interoperability, and improved onboarding experiences for new business customers – now that’s a language that banks can understand.
“Solve my problems today,” summarized Webster. “Don’t paint the picture of five years from now. Nobody asks to buy an API, and we all understand this but we don’t adapt our vocabulary when we talk to business users. Who will invest if they think API is just a big bubble that’s going to burst soon?”
Rebranding The API
After approving a new enterprise customer, Shields said it can take six to eight months to get the customer up and running with the bank’s payments and cash management products. It becomes a technological project for both the bank and for the customer.
Offer to fix that, she said, and banks won’t care what techy acronym you’re using. That’s the approach FI.SPAN is taking as it launches this month with a promise to onboard new customers in five minutes and five clicks.
The company is built on three core beliefs about technology in banking. Shields is hoping the new spin on the API concept will help bridge the gap for hesitant banks.
First, Shields and FI.SPAN believe that, for business customers, accounting applications are the banking channel of the future. She sees online banking as a great compliment, but says that ultimately these customers want to work in their own business applications, so that’s where banks need to meet them. If the accounting application is intelligently wedded to their online banking platforms, even better.
Second, they believe that banks can just as easily leverage FinTech partnerships, as be leveraged by them. Why should banks, who have the relationship with the corporate customer, have to give that up to a FinTech rather than bringing a FinTech into the fold of their own environment? There’s no good reason, says Shields, but it’s easy to see why banks would be hesitant if they felt they were being asked to sacrifice customer relationships to the innovation gods.
Third, Shields said the ultimate benefit of APIs is that they will allow banks to exchange richer data with their customers and to become the trusted stewards of that data. The FI.SPAN platform endeavors to bring those three core beliefs together into an accounting platform with bank-branded menus and bank-powered, turnkey B2B payrolls.
“There’s a spectrum of readiness for service interoperability,” said Shields. “Banks might have dependencies on monolithic stacks or fully outsourced cores to a single provider, and that limits their ability to be masters of their own domain.”
On the other hand, she said, “Banks that have embraced service-oriented architecture or implemented API programs internally in the last decade are more technically and culturally ready to think about what servicing customers through an accounting platform might entail, or interoperating with a non-bank partner,” she said. “FI.SPAN has to be ready to meet customers where they live.”
The Evangelism Phase
It’s all a question of getting through the guy Shields refers to as “API Bob.” He’s the technology pro who’s seen it all. The key, said Shields, is not trying to wow API Bob with technology; it can’t be done. Instead, prove the business use case, demonstrate the ROI, and show that you can be respectful of his security + infrastructure; only then will Bob be sold.
“Banks think of API strategy as defensive,” Webster noted. “You’re creating a series of thoughtful opportunities for banks to take and expose their services to different channels, but also to bolster the suite of things they do. This is an opportunity for them to take the lead by exposing their service and consuming other FinTech plugins that give their business customers an edge.”
That’s why Shields expects to see tier-one banks announcing pilots in accounting systems within the next year. She imagines they’ll get excited about the opportunity to take the reins of their own technological destiny, whether that involves accounting systems as a channel, third-party FinTech partnerships, or some blend of the two.
“The cost of reimagining and being innovative is well within reach of any institution,” Shields said, “and bankers are best placed to be the ones that reimagine financial services delivery. APIs level the innovation playing field. If you already have a great product, you too can be the entity that creates a delightful user experience.”