Lenders: Understand how to navigate the API jungle

By Cloud Lending, a Q2 Company

Original blog can be found here!

Taylor Adkins, Global Head of Product

Application Programming Interface (API) technology—a software platform that allows two applications to talk to each other—Is becoming essential to almost all businesses, and lenders are no exception!

According to Forbes, 85% of businesses consider web APIs and API-based integration fundamental to their business strategy and continued success. For lenders, an open API infrastructure means they can link to third-party data providers and aggregators to provide better products, loan terms, and a more efficient, seamless experience to borrowers. Savvy lenders are taking advantage of this new wave of innovation based on sharing services, and it means they can continue to focus on their core lending products whilst taking advantage of the latest digital innovations.

However, many organisations struggle to understand how to approach an open API strategy and can feel lost in the jungle! This doesn’t need to be the case. The tips and suggestions in this blog post will help you navigate a path to success.

Why do lenders need APIs?

Lenders need to react to market dynamics and deliver compelling propositions to borrowers quickly. The best and most efficient way to do this is to be connected to a network of third-party data providers and integrators. Simply put, if lenders don’t connect to a wider digital ecosystem, they will get left behind. Forward thinking lenders are learning more about APIs and their potential to transform their offerings.

Think about the great experiences you receive from app-based platforms in your own life. For instance, have you ever used Facebook to login into a service or app? This example is indicative of the ease of service your lending organisation can bring to your own customers through an open API infrastructure.

The benefits of an open API infrastructure

By opening their businesses to APIs, lenders can free themselves from the limitations of their legacy systems, changing the way they deliver digital products and services to all stakeholders – customers, partners, and employees. Some of the key benefits include:

  • Faster innovation and more scale – Beat off the competition with access to the right partners and data providers who can support the introduction of new products and services quickly.
  • Increase revenue – Appeal to new customer segments across wider geographies without incurring additional costs or impacting margins.
  • Faster credit decisioning – Directly link credit bureau data into your core lending platform, this avoids manually data capture, minimises margins of error, and supports laser-focused underwriting by avoiding delays caused by paperwork and multiple levels of manual sign-off.
  • Ease integration of back-end data and applications – Simplify synchronisation of data to and from your back-end systems and scale enterprise integration using standard API services, and make sure you put security best practices to work.

However, every lender is different and offers their own unique selling point to borrowers. It’s important to recognise what works best for your organisation. There is no one-size fits all API approach. Know what you want to achieve and understand how to work with the right data providers and other third parties to accomplish what’s right for you.

Top tips for making your API strategy a success

To build API products and participate in the API economy, organisations must take a logical, proven approach to the journey. Steps to take include:

  • Establish your digital strategy – This is imperative. With competition rife and new technologies coming to market almost daily, not having a coherent digital strategy could be a recipe for disaster. It’s important to understand what you want to get from digital technologies and make sure it aligns with overarching corporate objectives.
  • Align and unite across business units and culture – Make sure everyone is on board and understands the benefits and how they align with business objectives. This is not just the responsibility of the CIO or the IT department: You need your API strategy to be supported by the whole executive team. For many organisations, this will be a paradigm shift.
  • Engage a wide digital ecosystem – It is the role of senior executives to find new customers and improve internal operations and processes. But they can’t do it through a business as usual approach. By plugging into external sources of data, companies can find and capture these opportunities. Look to build and nurture your own API community by assembling (either buy or build) full lifecycle API management platform/tools and establish an API architecture, and make sure you put security best practices to work.

Embrace APIs and become a trailblazer with the best methods approach of Cloud Lending

Cloud Lending’s flexible, scalable and secure architecture enables multiple modern integration methods, such as web services and batch APIs. We have over 100 out-of-the-box API integrations, and the number is growing all the time.

With our demonstrated enterprise integration experience and use of best practices for developing a robust and resilient API infrastructure, the Cloud Lending approach is solid and has proven to be the right one for those lenders looking to grow smartly. It includes:

  • Developing third-party application integrations.
  • Ensuring all integrations meet the highest level of security and data protection standards.
  • Configuring integrations with core systems to bring all relationship and loan data into Cloud Lending securely and thoroughly.
  • Providing additional data integrations to existing disparate solutions.

I hope this blog has provided you with food for thought. Engaging the right data providers and third-party solutions through a robust API infrastructure can propel your customer offer forward. If you would like to find out more, please get in touch with me today. We’d be delighted to share with you the ways we have helped our clients develop their API strategy.