In the mid 90s, Bill Gates famously said that “banking is necessary, banks are not.” There is certainly a lot of truth in this statement. We all need banking services in some shape or form. But who delivers these services to us is secondary. In fact, Accenture concluded in a study conducted in 2016 asking over 30,000 people in 18 countries that if the tech titans like Google, Amazon, or Facebook would offer such services, 31% of the respondents would switch to them. This clearly imposes a significant threat on traditional banking institutions.
Another challenge that banks are facing worldwide are the increasing demands for regulatory compliance with respect to openness. Such regulations include, for instance, Payment Services Directive 2 (PSD2) in Europe, the Amendment Bill to Japanese Banking Law in Japan, the National Payments Corporation of India (NPCI) with the Unified Payment Interface, UK’s Open Banking standard by the Competition and Markets Authority (CMA), or the Open Banking Regime by Australia’s Federal Government. Banks approach these regulatory challenges in many different ways. Some see it as a serious business threat and only do the bare minimum for compliance; others see it as an opportunity and with smart investment start building banking platforms for the future.
Our suggestion for building the banking platform of the future resides on the principles of agile integration, which is an architectural approach centered around application programming interfaces (APIs) and API management. At its core, agile integration resides on the three pillars: distributed integration for greater flexibility, containers for the ability to scale better, and managed APIs for re-usability and hence speed. We described the details in an earlier post.
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