Banks should bank on APIs and apps, not applications - Gartner
30 October 2012 | 11442 views | 4
Banks need to ditch rigid and reactive applications in favour of flexible and proactive APIs and apps, says research house Gartner.
In the wake of the 2008 crisis, banks have lost their way and need to re-engage with customers, argues Gartner research director Kristin Moyer
"Banks need to transform both their delivery models and architectures to remain profitable and relevant in the financial services' value chain," she says, adding that applications are preventing this.
They should be ditched in favour of a model that uses public and private Web APIs and apps, enabling banks to deliver needs-based services that are relevant to the context, location and technology customers are using.
This will lead, contends Gartner, to proactive delivery that either anticipates a customer need or improves their financial health. Meanwhile banks can respond quickly to new opportunities, and third-party developers can build the tools they need.
Moyer gives the example of a mortgage refinance app that, like a weather app, can indicate - without customer initiation - whether it makes sense to refinance a mortgage, given current interest rates. With a few more clicks, the customer could apply and then view the process steps required for the bank to complete the transaction.
"This would be an entirely new way of banking, and if banks ignore this trends they will quickly find themselves relegated to low-margin, low-growth market segments and products that will no longer be profitable," she says.
Retiring redundant, monolithic applications is necessary to improve agility and efficiency, but also to prevent out-of-control complexity.
Gartner analysts say the biggest barrier to banking on APIs and apps is not technology. Security, scalability, performance, complexity, regulatory compliance and integration can be managed through careful IT governance, extreme reuse, SOA governance and API management.
Other barriers are more operational in nature - for example, the lack of a clearly defined design paradigm, governance model and accounting model, but the biggest barrier to platforms that provide private and public web APIs and apps, is the loss of control.