How APIs Help Banks Step Back From Siloed Business Banking

The U.K.’s Open Banking market initiative is seeping into the U.S., and into the business banking segment, as financial institutions (FIs) explore ways to improve their B2B services and compete with more agile FinTech firms. Banks’ willingness to embrace Open Banking signals an understanding that small and medium-sized businesses (SMBs) are demanding better services in the ways consumers have, and that leaving the SMB segment to rival FinTech firms is no longer an option for the largest FIs.

Business customers themselves are expecting faster, automated services from their banks as a result of Open Banking, Centtrip data found earlier this year, yet the majority of businesses surveyed said they haven’t seen any of the anticipated benefits yet. That could be because banks are struggling to make the most of the Open Banking opportunity for the corporate world.

Open Banking “was always going to be a bigger challenge in how it was going to be introduced to a corporate market, where, obviously, banking and transactional requirements are much more complex,” explained Centtrip CEO Brian Jamieson in an interview with PYMNTS last January.

While there certainly are greater complexities in the business banking sphere that may be holding the industry back from embracing Open Banking for the B2B segment, Roger Vincent, chief innovation officer and general manager at Trade Ledger, recently told PYMNTS that banks may be approaching the concept from the wrong angle.

“A lot of investment has gone into creating better onboarding journeys for customers,” he said, “but this, to us, doesn’t solve the major problem in banking.”

When it comes to embracing application programming interfaces (APIs) and data integrations with FinTech firms, FIs tend to focus on the individual products they can roll out to their small business or corporate customer bases. While a broader, more digital product offering is a step in the right direction, Vincent said the focus on the product itself makes for siloed suites that don’t address the underlying issues concerning connectivity and seamlessness, which businesses need from their banking providers.


It’s in this context that Banking-as-a-Service (BaaS) has emerged to not only connect banks with a single solution they can extend to their own customer bases, but a range of products and services that are all ingrained with each other — from lending to foreign exchange and trade finance, to insurance and payments. Competition from FinTech firms, and the adoption of BaaS and Open Banking, are combining forces to change banks’ approach, noted Vincent.

“Banks are steadily transitioning to very different business models as they battle to remain the primary financial channel of their customers,” he said. “They risk becoming commodity product providers if they do not diversify and offer a customer experience that rivals those of the big tech firms and non-banks.”

That customer experience must not only include new products, but a focus on interconnectivity. This shift has led Trade Ledger to introduce its so-called “marketplace banking” initiative. Beginning with a collaboration with trade credit insurance and BaaS firm Nimbla, Trade Ledger is launching a marketplace to not only provide FIs with a range of products they can deploy, but with a framework to support connectivity between them.

With Nimbla, Trade Ledger will also offer an integrated business credit and trade credit insurance proposition for banks.

Regardless of the product itself, though, modern banking technology must be able to be built as “modular, scalable and event-triggered solutions,” said Vincent. These requirements rely on API integrations with other platforms, with Vincent adding that this Open Banking model is “the utopia that most large, global banks are now building toward.”

Looking Ahead

Those FIs are also looking at a range of emerging technologies to achieve their Open Banking goals and improve the business banking experience. According to Vincent, these include tools like APIs, bots and artificial intelligence, though blockchain remains on the back burner for now.

“Most banks would admit that, while there is investment and progress being made in this space, and new bank consortia being established, these technologies are nowhere near being integrated into mainstream banking applications, and they remain experimental,” he noted, adding that blockchain is not yet at the point of having the shelf life banks demand from mature technologies.

However, even without blockchain, APIs can be powerful tools in financial services. In the trade finance market, Vincent said data connectivity can reimagine the business credit and risk analysis process to make it an “even lower risk than consumer credit.”

That can’t happen by simply launching a new product with an easy onboarding process. Rather, Vincent said, truly transformational services will occur in relation to each other, when data can be interconnected, and services like business credit are approached not as a siloed product, but as a value-added solution for corporate customers.