APIs and building an Ecosystem
The power of an ecosystem
A few years ago, most financial institutions were wondering how to deal with the rise of technology companies, which thrived on the back of the digitization of the entire sector. Fintechs used to be perceived as a threat to banks’ business models, offering innovative solutions for select parts of the value chain.
Nowadays the dust has settled and among those who benefited the most from the ongoing revolution in financial services are the neobanks and tech giants. One of the key characteristics of these new entrants in the banking space is that they were able to innovate quicker by leveraging the combined capabilities of multiple partners and solutions.
We believe that banks have the same potential for evolution and innovation provided that they too are able to build an ecosystem around their core systems. Rather than rewrite legacy applications or build new modules internally, it is now much quicker and cheaper to plug in existing solutions from the market, offered more often than not as cloud-based services. For instance, AI-based authentication or testing automation, payment processing or regulatory compliance products are readily available. At Temenos, we develop packaged software that covers most of a bank’s requirements. In parallel, we also provide access to dozens of third-party applications via the Temenos MarketPlace, to help our clients to build their own ecosystem and grow through collaboration.
An ecosystem works with APIs
Good APIs are a prerequisite to creating such an ecosystem. As we take one client live on average every day, we know that integration is one of the most complex and time consuming activities on any implementation project. Good software products are not just about business capabilities, they should also be designed to interface easily with other systems. In fact, the interface to each business capability should be specified even before writing any code. This is what we call API-first: the business services we develop must be designed to work in a diversity of contexts by different and changing applications.
The word API itself has acquired different meanings. The original acronym for ‘application programming interface’ refers to what we call ‘extensibility APIs’ in Temenos.
They are actual programming interfaces that enable our clients and partners to augment the business logic of our products with custom code. This custom code is generated from client-specific routines, which complement or override the core functionality in a controlled manner, across a virtually unlimited business scope.
Nowadays however, APIs refer mostly to REST APIs, i.e. methods to provide synchronous access to web services. We have been offering APIs for many years, based on a central synchronous request-response mechanism that gives access to the entire catalogue of services available in the system, from setting up new customers to updating core parameters.
The benefit of modern ‘APIs’ lies in the standardisation they offer. Standardisation does not suppress the need to run integration projects but it reduces the effort substantially and increases the client’s ROI. From a maintenance perspective, it is also a guarantee of better quality and the ability to replace systems more easily. We now publish our APIs using the dominant OpenAPI standard, formerly known as Swagger.
Adopting this standard has many benefits. The declarative resource specification of open APIs enables developers to consume the services without prior knowledge of, or training, on the underlying applications. Open APIs also simplify integration, with standard HTTP methods and a focus on documentation and examples. The standard Temenos API documentation published on our developer portal describes hundreds of API endpoints, which cover a very wide range of banking services that can be tested in a sandbox. We also deliver the tooling for our clients to generate and publish new APIs, without any code. They may extend the Temenos APIs or expose custom services built by themselves, quickly and securely.
APIs vs. asynchronous messaging
The word API is sometimes stretched to include asynchronous messaging. When it comes to the integration of back-end systems, the key requirements are scalability, high availability and persistence of data. In this context, instead of the synchronous request-response pattern that prevails with REST APIs, each system must be able to publish an event as soon as it occurs, to any number of subscribers, in a “fire-and-forget” asynchronous mode.
This is how systems can scale massively without degrading the overall performance. At Temenos, online asynchronous messaging has been a standard feature for a number of years. We developed a framework which enables us to select, without any coding, the events and data that the system will publish in real-time. We have been using it to integrate our own products, and every new product we acquire. More importantly, it is also available to our implementation teams, clients and partners to build client-specific interfaces. Making event publishing and streaming a code-free exercise has proven over the years to reduce dramatically integration and maintenance effort.
Keeping it simple
APis enable financial institutions to use standardised integration patterns to reduce the cost and complexity of user interface development and system integration. They are the foundation to building an ecosystem of applications, which the most successful banks leverage to innovate faster and at a lower cost.
Temenos APIs are pre-packaged and extensible by our clients without coding as well as being available across a wide variety of banking segments from retail to corporate, wealth management to treasury and fund administration.