Can APIs Offer Clients Change Without Disruptive Disruption?

Application program interfaces (APIs) have been on the map for several years now. So why does it suddenly seem like companies are turning to the technology like it’s the hottest new commodity in the market?

Part of the motivation is change. As the nature of global business changes, new business solutions like APIs are needed for companies to stay connected and engaged in the commerce.

But as companies turn to new solutions to adjust to their changing business needs, is it too much for them to change their infrastructure at the same time? Are the most effective business solutions the ones that do not require companies to implement significant changes on their own end?

That’s the philosophy Citi appears to be taking. The company’s Treasury and Trade Solutions division recently launched the CitiConnect API, which allows Citi’s treasury services clients to connect with Citi using their own treasury platforms or enterprise resource platform (ERP).

PYMNTS recently caught up with Mayank Mishra, managing director and global head of online banking and connectivity for Citi, who discussed the company’s work with APIs and shared his thoughts on what makes the most effective solutions.

Business Times, They Are A-Changin’

Mishra said the company’s march to develop CitiConnect began when it became clear that company needs were changing, notably as a result of greater eCommerce activity.

“We realized the world around us [was] changing,” said Mishra. Citi’s clients, he said, were looking for more real-time access to information, as well as the ability to make payments in real time. Based on these changing needs, it was time for Citi to adjust its business model.

“That’s when we realized it was an opportune time for us to invest in the API proposition,” he said.

Mishra said Citi engaged with its customer base to determine the best course of action. Based on conversations with Citi clients and market research, the company realized that developments in global eCommerce were creating new demands for these clients.

“We realized the clients were getting into newer business models, which require faster access to payments [and] faster access to information,” he said.

But when developing its API solution, Mishra said Citi wanted the solution to require as few changes as possible from their clients. He pointed out that no universal API standard exists, so it was important to give clients a solution that they could easily adopt and implement. This is why Citi decided to use the ISO 20022 standard because the company’s clients had the most familiarity with it.

“We realized we had to go with the standard that is well-accepted by the clients so they don’t have to go through a massive infrastructure change on their end,” said Mishra. He believes the company’s API approach will give clients the flexibility they’re looking for to access the relevant information they want.

Why the Sudden Interest in APIs?

In comedy, many jokes are all about … wait for it: timing! According to Mishra, the same can be said about API investment.

Mishra noted that APIs have been available for several years for banks and have proven to be an agile solution for these institutions because they allow internal infrastructure components to talk with each other more effectively. But with changes in the business world under way, Mishra said companies like Citi have been prompted to deliver that same level of connectivity to their clients. APIs are seen as a way to deliver that connectivity.

“Given the various changes around business models and how the clients are perceiving agility, I think the timing is right [to invest in APIs],” he said.

For example, as eCommerce activity becomes more prevalent around the globe, clients are seeking faster access to information to perform tasks, such as a transaction status or refunding customer orders. APIs can provide clients with the same agility that banks enjoy, so it makes sense to invest in these systems.

Another area that is spurring investment in API development is the rising gig economy. According to the latest PYMNTS Gig Economy Index, there are about 55 million gig economy employees active in the U.S. workforce, representing about 35 percent of the total workforce.

Mishra said Citi is seeing companies invest more in delivering B2C- and B2B2C-type solutions as a result of more people entering the gig economy. And APIs could be a promising option to help companies deliver their payments to gig workers in a timely fashion.

With these developments under way, it makes sense for financial companies to deliver APIs to meet client needs.

“With changes to eCommerce and the gig economy and faster payment infrastructure around the world, our timing is just right,” he said. “Different things have to come together for an innovation to be successful, and I think it’s about timing.”

The Future of API Innovation

So far, Mishra said, Citi has seen about 40,000 client interactions using APIs and has investments pledged for the next 16 to 18 months, a figure he described as “very encouraging.”

“We measure ourselves in the context of client adoption,” he said. “The number of interactions is a good metric for that.”

Looking to the future, Mishra said he is also looking at ERP systems being used to connect and interface with APIs. These connections, he said, are the foundation of strong partnerships with clients.

“It’s very encouraging that ERP systems are now opening up and providing access to their functionality using APIs,” he said. “This gives us a lot of motivation and confidence that we are on the right track. We’re definitely keeping an eye on them, and they’re great partners.”

Going forward, Mishra said that he anticipates further investment in API solutions. And the most successful APIs, he added, will be the ones that don’t require clients to drastically rethink the way they do business or operations.

“A very successful API is the one where nobody notices,” said Mishra. “It just runs smoothly behind the scenes.”

In other words, for an API to be useful for an organization, it should require as little relearning of operations from companies as possible. While companies value change to benefit their clients, a solution that keeps disruption at bay is more enticing.

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The PYMNTS.com B2B API Tracker, powered by FI.SPAN, 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.