Banks look to APIs for digital securities servicing

The demand for Application Programme Interface (API) technology is gaining momentum as firms look to digital services to improve efficiency and establish new business models.

A joint report from secure financial messaging provider SWIFT and the Boston Consulting Group (BCG) found that interest in APIs - which determine rules and standards for integration between software applications and data sharing - have seen a marked rise in interest from financial services firms over the course of the past year, particularly in the post-trade area.

Over the course of 2018, awareness of APIs among asset managers increased 26 percentage points to 72 per cent, according to a BCG survey. This commercial interest in APIs has also driven up the rate of pilot schemes and use cases between asset managers and their clients.

The report stated that the growth of APIs for post-trade has resulted in real-time visibility of information such as settlement status and intraday risk, enriched data and analytics and operational benchmarking for comparison with peers.

Adoption of APIs in the security servicing industry has been slower than in other areas of financial services in part because it has lacked a regulatory catalyst, the report said. Additionally, there is little consistency in players’ readiness to adopt APIs.

More than half (56 per cent) of respondents in the BCG survey said the maturity of their post-trade APIs were “experimental”, while just 21 per cent said it is “high” or “medium”.

Sumitra Karthikeyan, global head of securities servicing for BCG, said: “Wholesale banking is becoming more digital, and APIs have been one of the key technologies underpinning that transformation.

“APIs are now starting to break into the securities servicing industry, emerging as a leading technology executives turn to as they seek to transition to digital-first firms,” she continued, adding: “While familiar challenges from the past such as interoperability and security are headwinds to adoption, we believe they will be overcome and expect increasing adoption going forward.”

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