Accenture Banking Blog

APIs as an innovation accelerant

Application programming interfaces (APIs) are nothing new. They’ve been driving operational efficiency in the IT environment for more than two decades. What is new is that APIs have become mainstream in the broader business world, allowing companies to create new business models that deliver new revenue streams and greater value to customers. That’s been transformational. You only need to look to companies like, Inc. (Amazon) and, inc.1 to see how influential APIs are in driving innovation.

While the financial services industry―and banking in particular―have lagged behind other industries in API adoption, things are changing. Banks are beginning to understand the value APIs can bring to their business. For banks, APIs show promise as an innovation accelerant. API implementation done right can help banks transform themselves and unlock new sources of business value.

Why APIs, and why now?

There are four key factors driving the banking API adoption journey:

  1. New regulatory initiatives, such as the Payment Services Directive 2 (PSD2) and Open Banking, are pushing banks to become more open to new market participants while at the same time providing greater levels of security to protect customers. APIs facilitate those efforts.
  2. Disruptive competitors like financial technology firms (fintechs), challenger banks and neo-banks are using technology to win away customers. APIs facilitate the technology adoption that can help banks remain competitive.
  3. Empowered customers expect the same level of service and innovation from their banks as they receive from internet giants like Amazon and Google LLC. An API architecture can help put a bank on par with other digitized service providers.
  4. The need for new revenue streams is pushing banks out of their traditional comfort zone. APIs open possibilities for growth through expanded customer acquisition and new offerings.

APIs are fast becoming the digital glue of the modern bank, allowing banks to efficiently exchange data both within the organization and across the bank’s ecosystem. APIs allow banks the flexibility to quickly bring new, customer-pleasing products and services to market.

The more progressive banks are using specialized internal APIs in the form of “microservices” that are designed to solve a particular business problem or create new value for customers. APIs are creating the foundation for new, profitable relationships with vendors and partners that can lead to new revenue generation. So, what’s preventing every bank from jumping on the API bandwagon?

Roadblocks that stall API adoption

There are several roadblocks that can get in the way of a bank whole-heartedly embracing an API architecture, including:

  • Taking a reactive approach. Simply cobbling together an API program without a sound strategic foundation can result in spiraling IT costs, limited ROI and program failure.
  • Cumbersome legacy systems. Dependency on a slow, out of date legacy system that is too expensive and risky to replace hampers the ability to adopt an agile API architecture.
  • Fragmented implementation. Effective API implementation requires a coordinated, organization-wide, API-first approach with absolute strategic support that begins with senior leadership.
  • Resistance to new business models. The API business model is very different from the traditional own channel/own product banking business model. Stakeholder failure to see beyond a technology-only view of APIs can interfere with a bank’s ability to fully monetize APIs and generate new revenue streams.

Banks can also struggle with implementing APIs due to an inconsistent data architecture, overly focusing on cost reductions to the extent it hampers knowledge sharing between teams, a siloed development function, unclear data ownership and issues with data protection and regulations.

The solution: the four pillars of effective API management

Banks that can effectively create and maintain a true API-driven architecture can benefit from a significant competitive advantage. In fact, research shows that banks that embrace the new API-driven Open Banking initiatives can expect a potential revenue uplift of 20% by 2020, while those that don’t risk losing 30% of revenues to disruptive industry players in the same time period.

The good news is, the roadblocks to API adoption can be mitigated, or avoided altogether, by taking a four-pillared approach to API management, which I’ll discuss in my next post. Until then, read more about APIs for modern banking in our new report: How Banks Can Thrive in an API Economy.

“How Mulesoft fits in at Salesforce,” Computerworld UK, September 28, 2018. Access at:
Carmina Lees

Carmina Lees

Managing Director, Accenture Financial Services Technology Advisory, UKI lead

View Profile