Some banks and insurers are investing billions of dollars to become digital disruptors, and the stakes couldn’t be higher. The 2022 Connectivity Benchmark Report shows that they could lose on average $7.6m each through failed initiatives, which is significantly higher than the average across all sectors. Partly this is because customer expectations of financial service providers are sky high after two years of pandemic-era digital interactions. They now expect banks and insurers to provide the same kind of intuitive, seamless experiences they get from their mobile phone, gaming, and social media.

Integration is key to financial service providers’ readiness to meet those expectations. The ability to easily connect apps, data, and devices to drive automation and create enhanced user experiences will increasingly be the difference between success and failure.

Connecting a digital world

Integration is critical to the success of any digital delivery project, whether it’s developing new mobile banking capabilities, or enhancing insurance fraud detection functionality for internal teams. It drives improved customer and employee experiences and unlocks data from silos so banking and insurance leaders can make better business decisions. Those that have integrated user experiences seamlessly enjoy increased customer engagement, enhanced visibility into operations, accelerated innovation, ROI and project delivery, and increased adoption of automation.

However it’s not easy to get integration right. On average, financial services providers have 984 applications running across their business, yet fewer than a third are integrated. Nearly three-in-five global financial institutions say integration is a challenge.

Seeing the legacy conundrum

Part of the reason why financial services has resisted digital change for so long is because of the sheer quantity of legacy IT in the sector. This can make it difficult to migrate applications to the cloud and integrate apps and data across traditional silos. It’s not just legacy infrastructure that is proving to be a stubborn roadblock to change. Many IT departments continue to rely on custom, point-to-point integrations.

This custom code is just about manageable when there are two or three systems to integrate, but not for the multitude of connections between the large numbers of applications that modern digital banking and insurance experiences require. Point-to-point may have worked in the past, but it’s become far too complex, time-consuming, and costly to deploy and maintain in today’s cloud-first world. The truth is, IT could and should be prioritising other things that drive greater value. Teams are inundated with requests to support digital innovation projects, alongside the daily operational grind of keeping the lights on. 

Embracing a composable business strategy

A composable business strategy has become essential for financial services organisations looking to overcome these hurdles, so they can drive the digital transformation their customers and employees expect. This strategy can best be supported through API-led connectivity, which enables teams to create seamless integrations between applications, data, and devices. This helps organisations become more composable, which in turn empowers users to build new services and experiences relatively easily. In fact, implementing no- and low-code tools as part of this approach can empower business technologists – employees outside the IT department – to create their own digital innovations, taking some of the pressure away from central IT.

Since there’s no need to rebuild the same point-to-point integration for each new project, time-to-value and costs of digital transformation initiatives can be minimised. By unleashing the creative energy of business technologists in this way, banks and insurers can do much more with their IT teams, freeing them up to spend more time on higher value work. 

Paving a road to the future

Financial services organisations have made great progress in their efforts to embrace composability. On average, nearly half of their internal software assets and components are now available for developers to reuse. This is leading to the emergence of more mature innovation strategies that empower business technologists to integrate apps and data via APIs.

Composability, enabled by API-led connectivity, won’t just help banks and insurers to drive innovative home-grown services. In a world of open banking, it will also enable them to provide seamless connectivity with third-party services and providers including fintechs. That will be key to gaining and retaining customers that are looking for more than traditional banking services and insurance products.

The future of the financial services industry is looking more digital by the day. Thanks to reusable APIs, financial services firms finally have an effective way to unlock traditional data silos and drive connected experiences fit for a digital world, and they don’t need to break the bank to do so.