It wasn’t very long ago that nearly every banking-connected function required a trip to the local branch. Even the simplest tasks like changing the PIN on a debit card required a command appearance. Today, CO-OP Financial Services Chief Technology Officer Pam Brodsack said, a customer can do that — and a whole lot more — from within the confines of their mobile app from just about any place on earth due to the power of application programming interfaces (APIs).
“What credit unions use APIs for is to add new functionality to [make] their existing applications seamless,” she said. “They are the bits of code that govern the access points such that features and functions can easily be integrated.”
Those features and functions might be authentication, payments, security, card controls or a host of other contexts, she said, depending on what specific set of customer wants must be addressed.
And what the consumer wants, at credit unions and just about everywhere else, Brodsack said, is speed and ease. That is what consumers expect, and APIs make it easy to flip on those functionalities overnight, instead of after a long, tedious rollout.
The challenge for credit unions (CUs), she said, is in knowing that APIs aren’t by themselves a digital strategy — the idea that one can easily flip on function via an API can lull leaders into a false belief that tapping into tech to better serve the customer base is as easy as turning on a light.
“APIs have been around for years and you really have to think about them in terms of your overall digital strategy,” she said. “It takes some time and planning from an end-to-end perspective on how do we want this to work, what do we want the member experience to be.”
Making an Impact
There are a variety of places APIs can and do make a difference within credit union organizations, where the member experience tends to be the north star that guides the development process.
“It’s a way to take disparate systems and gain access in real time,” she explained. “Consumers need real-time access to their data. And that all ties together through an API and when you have this strategy and everything is connected together, you are making business decisions based on fact and not guess because the data is all aggregated in one place and you can see it flowing in real time.”
In particular, she noted, in the context of developing a strategy, the right suite of API-based tools properly deployed is a strategic advantage of credit unions in two ways.
First, she said, it allows them to build a digital consumer experience that most closely tracks to and resembles what consumers most value about the experience of banking with a credit union. That means making it as easy to get a very holistic view of their financial situation — and then act on that information as they want to. That might be paying bills, and it might be moving funds — what APIs properly leveraged can mean for a CU is being able to build that customer service set for their customers' needs, drawing on their extraordinarily intimate knowledge of their customers and their preferences.
Second, she said, APIs are the great equalizer in the field, because APIs allows them to add customized service without necessarily having to empty whole divisions to attempt to build that function end-to-end internally.
And that is an equalizer, she said, that is non-option at this point. Credit unions can’t sit this out, decide high-tech is not for them and expect to survive. The table stakes of the modern market, she said, is a fully loaded mobile app that essentially acts as the teller in a consumer’s pocket. And the good news, she said, is that when it comes to the table stakes part of the story, credit unions, by and large, are getting with the picture. Ranking the whole of the ecosystem on a scale of 1 to 5, she told Webster, the trend is actually toward a 5.
But table stakes just get one into the game. The real question when it comes to credit unions and the future of using APIs, she said, is what over-the-top functionality they can embrace beyond the basics to speak to the next generation of consumers.
Building What’s Next
Looking at modern consumers, particularly millennials, the push is toward increased digital intermediation in their financial relationships. Peer-to-peer (P2P) payments, she noted, are the easy, obvious example of what the next generation of offerings need to include because younger consumers have spoken and this is their chosen interactive method.
Those next-generation functions, she said, are hard to time out exactly for individual credit unions, but the direction is moving formally. CO-OP, she said, is currently beta testing Zelle functionality with a handful of members, and is looking to push general availability for credit unions by the end of 2020.
More generally, she said, what is undeniable is that the direction of the market is forward when it comes to digital and the pace is quickening. It has taken some time for it to be the case that the trend in the market has been toward clearing the minimum bar for API-enabled digital offerings. The path to offering more services, and more next-level applications when it comes to digital service, on the other hand, will likely be a lot shorter — and much more swiftly traveled.
“I am seeing more and more credit unions have a digital officer and putting emphasis on what their digital strategy will be,” she said, “which is driving the technology team to move faster and to implement new features and functionalities in a much more compressed time frame.”