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The Benefits of an API-First Design in FinTech
In MuleSoft’s 2024 Connectivity Benchmark Report, among 1000 IT professionals, 99% stated that their organisations utilise Application Programming Interfaces (or APIs).
With that being said, very few of these organisations have managed to fully integrate all of the programs they use – at only 26%. This is because developing software specifically tailored to and optimised for the use of APIs is a relatively new approach. So, plenty of legacy systems have a lot of difficulties properly integrating APIs into their overall company’s architecture – or no way to do it at all.
And with the finance sector being especially notorious for using reliable, but also very old systems, I want to focus on the benefits of an API-first design in FinTech specifically. After all, many of the best features Atfinity has to offer are only possible thanks to its foundation as API-first software – which I will also touch on.
Defining an API-first approach to software development
An API-first approach refers to the practice of taking APIs into consideration from the very beginning of software development as opposed to it being an afterthought. In other words, when creating new software, or even new features for existing software, setting aside the resources needed to ensure that key APIs will be functional and can be properly integrated into your system.
Furthermore, it’s best to establish what features should be handled and by which API from the start. This is so that your development process can be faster and more efficient, as there won’t be redundant or overlapping systems.
In short, an API-first approach requires planning. And while no one can predict exactly how their software will develop over time, it’s essential to consider the fundamental functionality of your software and how APIs can be integrated into it for optimal results.
Why legacy systems struggle with implementing APIs properly
A lot of the problems that modern fintechs are trying to solve are caused by legacy systems. Not necessarily because the systems themselves are poorly made but rather because both finance and IT have changed drastically over the years.
In the context of this article, we can point to the fact that very old legacy systems weren’t made to accommodate things such as web APIs as they weren’t as widely-used or well-established back then. And even when APIs can be integrated, other issues can arise due to differences in how software was used a few decades ago compared to now.
For example, very old systems used to run batch operations. Therefore, they were a far cry from today’s always-online, responsive systems. Needless to say, by today’s standards, utilising such a system and having to wait an entire day for a risk check or other similar processes will lead to a poor customer experience.
Or consider performance. An API is going to behave a lot differently than a regular user and can perform actions a lot more quickly. Suddenly the system usage is a lot different than what was initially predicted or what the software can handle, and if not accounted for the entire system gets staggered as a result.
Not only can this then lead to performance issues but the issue itself can be very difficult to deal with as getting to the root cause will require significant time and effort.
On the other hand, within an API-first philosophy, such issues are considered ahead of time and taken into account when building up the software. Therefore, if a certain API does cause performance issues, the problem is more likely to be surface level and easier to fix.
For example, consider how we sped up our configuration manager by simply changing our parser. This was possible because we purposely separated that part in our architecture. Alternatively, had we not designed this part of the software as an independent unit, the entire process would have been a lot more complicated.
The benefits of an API-first approach
Since optimising your software for APIs isn’t simple, especially if you’re doing the work retroactively, it’s worth considering whether such an approach is necessary or beneficial enough in the first place.
Generally speaking, an API-first approach will help your software stay competitive, use best-of-breed integrations, and help you scale up your business more effectively.
But let’s take a closer look at these points.
Staying competitive
It’s forecast that by 2027, there will be over 500 billion API calls annually. So API technology will likely only get more popular and influential in the near future. In fact, we’ve already seen major shifts in the software industry due to APIs, with microservice software slowly establishing itself as a very valuable option.
Therefore, it’s safe to assume that most software will to an extent depend on APIs. And if your software can utilise the APIs it needs optimally, it’s bound to be a major leg up on older systems in terms of performance. Not to mention that if the software in question also has a well-made, optimised API of its own, it will drastically increase the pool of potential customers and/or partners.
Best-of-breed integrations
To piggyback off the previous point, having software that can easily utilise APIs will also just let you have more options. And this is rather important as it means that you can sift through all possible offers and find the API that suits your needs the best.
So, for example, instead of having to get a general-use onboarding system and then twist and bend iit until it fits the needs of banks, you can just get Atfinity and benefit from decades of experience in the industry.
Not only does this save a lot of time and resources in regards to deployment and maintenance but it also allows you to stay ahead of the competition, as Atfinity will keep getting better over time and will adapt to changes in the industry.
And this is why we generally advise our clients to take their time and find best-of-breed APIs that fit their software like a glove instead of just settling for whatever comes their way.
It’s easier to scale up your business
A proper API structure is essential for scaling up your business as it lowers the odds of different pieces of software being incompatible. Harking back to the MuleSoft study, on average, businesses used 1000 different programs within their organisation.
Therefore, even if we were to say that just 1% of that software can’t be properly integrated, you’re still looking at 10 different issues. And since these issues will likely have to be handled on an individual basis, your company has to allocate a significant amount of resources to this task.
And from a developer perspective, an API-first approach is even better for scaling up. Namely, if you start developing your software as separate APIs, you can then licence those individual parts of the software before the entire architecture is even built.
In other words, for banks, API-first software helps them scale as it makes it easier to integrate all of your software and for developers, creating API-first software means getting to market a lot more quickly. So, a win on both fronts.
Why an API-first design is important for the finance sector
As we’ve mentioned, while every business can stand to benefit from an API-first approach, the finance sector is especially crucial.
This is due to the fact that banks typically rely on multiple systems working in unison. For example, a core banking system for logging customer information, an onboarding system to guide new customers through your user journey, a KYC system for compliance checks and so on.
And while every developer likes to claim that their software is the best at everything, that’s unlikely to ever be true. After all, if a company builds their entire business around just one feature of a given process, they will usually perfect that one feature to a degree that can’t be matched even by way larger competitors.
And competition is fierce in banking, with there being just under 5000 banks in the EU alone. Therefore, most banks simply can’t afford to have subpar software. Rather, by leaning on fintechs that have perfected individual processes, banks can use their APIs to provide the best possible experience.
How the Atfinity API can upgrade your banking system
To better understand why being able to fully utilise APIs is such an important factor in banking, let’s take a look at our own API and see what it has to offer.
At Atfinity we both use third-party APIs, such as Scrive and SaaScada, and have our own API. Our API allows you to use our case manager to perform a few key processes, such as:
• Guided automated onboarding
• Document generation
• Centralising case and client data
• Risk calculations
• Client Lifecycle Management
• Loan origination
Not to mention that Atfinity can also “sit” in the middle of your software infrastructure and help connect different pieces of software together. The most widely applicable example of this would be performing AML checks, as Atfinity can make automated API calls to IDV providers and import that data into your risk calculation system.
Therefore, if your system can take full advantage of Atfinity’s software, you can cover most of your bases with one piece of software. However, you can also just use certain functions to enhance your already existing framework. But all of this is only possible because we designed our software with APIs in mind.
Implementing the Atfinity API
Atfinity is a client-server single page web application that consists of a browser front-end and an API backend. However, enterprise customers can run Atfinity headless within their own infrastructure and just communicate with our API instead.
There are two deployment methods for Atfinity: via either Kubernetes Helm chart or Docker Compose. We generally recommend the former method but we have had success with Docker Compose as well.
You can also choose whether you’d want to run our program through our Atfinity SaaS Cloud, on your own private cloud or host the data on-premise. The Atfinity Cloud option is the best choice for banks that don’t want to allocate resources to maintaining the cloud infrastructure.
Private clouds on the other hand are the most popular option for banks that already have a dedicated IT team. And on-site hosting, while rare, can be an option for businesses that want complete control over their data.
But regardless of the decision you make, you will be provided with access to our extensive API documentation portal and our configuration team will always be a message away when it comes to making changes to or deploying the software.
Conclusion
In conclusion, being able to integrate one or more APIs into your core software is becoming more and more essential. It helps your software in terms of performance, helps you stay competitive, and allows you to scale up your business much more efficiently.
This is why we made Atfinity with an API-first approach and why we’ve put so much effort into our own API as well. To see how our API can fit into your software infrastructure and better your banking processes, click the button below and go through our short assessment process.
Book your demo today and see why leading financial institutions
worldwide trust Atfinity to drive their digital transformation.
Book your demo today and see why leading financial institutions worldwide trust Atfinity to drive their digital transformation.