It is happening all around us! Evolving consumer demands and regulations, maturing technologies, and increased competition from FinTechs and DeepTechs drive the need for API-enabled business transformation and innovation.
Enough of the why, let's get to the what! What are the 10 potential pitfalls that we recommend to you as a bank or financial service organization that you should avoidi in your API-fication journey? Keep an eye out for these potential stumbling blocks:
1. "We already use APIs! We don't need to leverage advanced API management."
Not having a clear API strategy: Before you start building APIs, you need to have a clear understanding of what you want to achieve with them. What are your business goals? What are the benefits you hope to realize? Once you have a clear strategy, you can start to build APIs that are aligned with your goals.
2. "API management? IT takes care of that. Let them worry about it. "
Not involving the right stakeholders: API management is not just an IT project. It involves all stakeholders in the organization, including business, marketing, and security. Make sure you involve all the key stakeholders right from the beginning so that you can get their buy-in and ensure that the APIs are built to meet their needs.
3. "IT should take care of it? Well, we are waiting for the business units to define the requirements."
Not using a robust API management platform: While the market has several API management platforms, the key is to choose a platform that is robust and scalable, and that can meet your specific needs.
4. "For now, open banking and embedded finance do not concern us."
Regardless of the geography — and taking into account all of the benefits which open banking brings to an industry already struggling in the face of disruption from FinTech upstarts (more on those open banking benefits in a moment) — the requirements needed to be in place to make open banking a reality appear to be common: opening data with APIs, governance, consent and security. All of this is made possible by the ongoing development of APIs.
5. "We don't need agile enterprise architecture management yet!"
In today’s rapidly evolving business environments, agile service delivery is essential for business success. This goes hand-in-hand with developing robust enterprise architectures which are not only technically future proof, but also must ensure strict adherence to relevant regulations when exposing customer data through APIs.
6. "API platforms? We are not even cloud-based yet. How could we even start thinking about API management?"
API management platforms benefit organizations by centralizing control over their API integrations while ensuring they continuously meet high performance and security standards. These can be on-premise, cloud based or hybrid (multi-cloud) based on the architecture defined patterns.
7. "Our current approach already covers API security and analytics. We should be fine. "
Not managing your API traffic: It is quite possible for API traffic to spike unexpectedly. It's important to have a way to manage your API traffic so that you can avoid service outages. Any lack of robust fraud detection and prevention measures can lead to financial losses and reputational damage. Banks should implement real-time fraud monitoring, anomaly detection, and transaction validation mechanisms within their API infrastructure.
8. "Who are you kidding? Investments in advanced API management don't pay off."
Not documenting your APIs: Well-documented APIs are easier to use and understand. Make sure you document your APIs so that your developers and partners can use them effectively. Poorly documented APIs and lack of developer support can hinder adoption and innovation. Banks should provide comprehensive API documentation, SDKs, and developer support resources to facilitate easy integration and foster developer engagement. These investments pay off in the long run.
9. "We don't need an API strategy; we can do a trial & error approach. One day we will get it right!"
Not promoting your APIs: Once you have built and launched your APIs, you need to promote them so that developers and partners can find them easily. There are a number of ways to promote your APIs, such as creating a developer portal and using social media. Any failure to address the integration challenges posed by legacy systems can impede the adoption and effectiveness of API management. Banks should devise strategies to integrate APIs with their existing core banking systems, ensuring smooth data flow and consistent customer experiences.
10. "KPIs are not required. Too much overload."
Not measuring the success of your APIs: It's important to measure the success of your APIs so that you can track their performance and make improvements. To measure the success of your APIs, you can choose amongst multiple metrics such as API traffic, API usage, and API errors. Banks should implement rate limiting, throttling, and access controls to protect APIs from being misuses and from any unauthorized activities.
By avoiding these pitfalls, banks can ensure that their API management projects are successful.
Check out our resource center about API-enabled banking to learn more.
Are you interested in discussing with us secrets of success, promising use cases, and reasonable steps to kickstart a new initiative on advanced API management? Let's talk! 🙂