NEW REPORT: Banking’s Open Future

The future of banking could be all about access.

Most observers may be used to the idea of large corporations like banks and other FIs and service providers competing against one another and keeping their cards close to their vests. But increasingly, major players in the space are opening their databases in order to work more seamlessly with new and innovative FinTech firms that are providing financial services with the internet and smartphone apps, via application programming interfaces or APIs.

This new technology protocol allows diverse software components from different companies to communicate and share data, and it’s being embraced by some of the biggest names in the industry, including major international banks like including Citi, Chase and Standard Chartered.

Late last year, Wells Fargo opened a new API portal, driven by the motivation to connect customers with a broad range of financial services on demand, according to Imran Haider, the head of Wells Fargo’s API Gateway channel.

For the inaugural B2B API Tracker, PYMNTS caught up with Haider to find out more about Wells Fargo’s investment in APIs and the future of the technology for financial institutions and service providers.

Haider told PYMNTS that the company’s investment in APIs is driven by distribution — getting customers the financial services they want, when and where they want them.

“We view new technology like APIs as the next step in distribution,” he said. “It’s really about getting financial services products into any digital experience so you no longer have to come to a bank site to leverage a particular functionality or complete a particular transaction.”

Giving Customers More Access

Haider said that Wells Fargo is eager to satisfy new customer demand for access to financial services, whether it be from their banks or other institutions.

According to research released last year by the Federal Reserve System’s Board of Governors, 71 percent of banking customers regularly access online banking services, and mobile banking services are used by nearly 40 percent of customers. Mobile banking services are especially popular with younger consumers, with roughly two-thirds of consumers between ages 18 and 29 and 58 percent of those between ages 30 and 44 using mobile banking services.

And research from the American Banking Association indicates that customers want even more access to banking and financial services on the go. The group’s most recent annual survey found that 55 percent of banking customers said they preferred to manage their bank accounts using the internet, and another 18 percent said they preferred using mobile services.

Haider explained that Wells Fargo is looking to satisfy these increasingly digitally driven consumers by offering more access to financial services from banks with APIs.

“We believe that, as a customer, you should be able to take Wells Fargo anywhere, and our customers increasingly want to access banking services, no matter where they are,” he said. “That’s where APIs come in. What APIs try to do is give customers tools to have really rich and contextual experiences that make financial services easier for them. For us, that’s really the primary driver of APIs.”

Haider also said that Wells Fargo has future plans to expand their API and developer portal offerings in an effort to find new use cases and integrations, bringing these financial services to customers in new, convenient ways. He noted that the company is currently offering an API channel built to support many different services offered by Wells Fargo, including retail banking, wholesale businesses, home mortgages and treasury management.

The company’s goal is to find new uses for API technology in order to expose new functions or features and integrate them into new experiences for customers. Haider also noted that the company is constantly updating and refining currently available APIs in order to make integrations as effective as possible for customers.

“We want to add a lot more APIs and identify opportunities to get more uses cases out there,” Haider said. “Many of these APIs we start in a pilot, get feedback from customers and improve them, so I think there’s a lot of work to be done around enhancing and improving and optimizing our APIs so that we have the very best products out there in the marketplace for our customers.”

Banking’s Open Future

Wells Fargo isn’t alone in investing in new APIs and developer portals.

According to a 2016 report from FinLeap, API banking is increasingly being added into the business models of banks across the industry, with three quarters of the top 50 banks in the world opening their APIs to FinTech service firms. Haider said that he believes this new trend in increased API usage is driven by the same desire to give customers more access to their financial accounts and services.

“I think the broader industry of banking in general is beginning to really recognize the power of APIs and the opportunities that APIs provide for engagement with customers,” he explained.

As more customers embrace the convenience and access offered by digital banking options, Haider predicted that APIs and other similar data-sharing portals will quickly become the most exciting technological development in the financial services industry. He cited API use cases for IoT-connected devices, which would allow banking customers to access accounts and complete transactions via the Amazon Alexa, or some kind of feature in an automobile.

“There are just so many different possibilities that APIs provide for [customers] to interact and engage with their bank,” he said.

As consumers increasingly demand the ability to bank from wherever, whenever, it seems allowing access via APIs may be the key to acquiring new customers — and keeping old ones.

To download the March edition of the PYMNTS.com B2B API Tracker, click the button below.

About the Tracker

The PYMNTS.com B2B API Tracker, a FI.SPAN collaboration, serves as a monthly framework for the space, providing coverage of the most recent news and trends, along with a provider directory highlighting the key players contributing across the segments that comprise the B2B API ecosystem.