APIs and API Management for Financial Services
On the 31st of August I was in Zürich to present “API Management” to Financial Services customers. APIs are an obvious building block for any financial services or insurance company. In the following post, I will elaborate on why and how.
Yesterday I read from an article on InternetWorld.com that there are more than 4 million apps on the leading app stores (Apple & Google), with 70% of German citizen having used at least one app in April 2016. Furthermore, online banking is being used by almost half of smartphone users, more than music streaming or flight check-in. We have definitively arrived in the age of the smartphone!
But it’s not only about the end-user. Think about the following scenario: a customer wants to buy a new and expensive TV at his local dealer. Instead of only selling the TV, the dealer bundles it into an offering that contains a credit or a transport insurance. The credit and insurance services are offered by financial services partners.
Partner services and apps have one thing in common: they are being fueled by “APIs”. What exactly are APIs? We are talking about technical interfaces provided over internet-protocols, that are lightweight and easy to use. Maybe you have heard of Amazon, an online-book-seller, which grew into the cloud space at hypersonic speed. In 2002, Jeff Bezos issued a mandate that ordered all teams to have their data and functionality over service interfaces (eg. APIs), so that they can be externalizable. This was one of the key aspects of Amazon’s success.
Digital natives such as Expedia, Uber, Google, DocuSign have built their IT from scratch on APIs. But what about companies that have a huge IT-legacy? The API approach that SAP is proposing, resides on the “bi-modal IT” that Gartner is talking about. In essence, the stable IT running core processes and holding the company’s data, shall not be impacted. The innovative IT is the IT where innovation is happening, with fast and agile project implementation. This layer can reside in the cloud, for instance in the Hana Cloud Platform (HCP).
The API Management Service of HCP, can tap directly into existing WebServices or APIs that reside in the stable IT, in order to externalize its data and functions. Technically, this is achieved using the HCP Cloud Connector, which is a secure, easy and flexible way of accessing data of the stable IT environment from within the cloud. Once the connection is setup, it is very easy to externalize data and functionalities from on-premises systems: the API Management Layer acts as a facade to the outside world, providing all necessary features that allow companies to participate in the digital economy.
For instance, Credit Mutual Arkea is offering white-labeled digital financial services to it’s customers, be it Allianz Banque or Banque Renault: their backend systems provide APIs that allow them to tailor features and functions very precisely.
The features that are available in the API Management layer can roughly be sliced into 3 categories: Runtime, Consumption, Analytics.
The APIs are a facade to existing data or functionalities, and the API Management layer “externalizes” them. That means that the API Management layer:
– secures the access to the APIs, on all levels (network, content, authorization, …).
– protects the backend system of unexpected loads (spikes, concurrent accesses, …). Furthermore, the API Management layer can reduce latency thanks to its caching capability, also meaning that backend are protected from unnecessary requests.
– transforms the API content in order to add contextual information, or strip-down information from the backend. For instance, when returning customer information including the address, geo-location data can be baked into the results: the API user can easily use that information to display a map within his app.
Note that all the features above come as pre-tested, pre-built artefacts, that only need to be configured. Therefore, exposing an API can be extremely quick.
As described above, API Management is about externalizing the access to data and functionalities so that they can be used by partners, customers or internal employees. In any case, API users do need an efficient way to interact with the APIs. This is why SAP API Management offers:
– self-service functionalities: API users can self-register on a Portal, browse an API catalog, and subscribe to APIs. This happens on a self-service basis, speeding up the partner on-boarding and eventually reducing time-to-market.
– interactive documentation: within the documentation, the API user can test the API, without having to setup a costly, time-consuming, test environment.
– integration with the runtime: when an API user wants to use an API, he subscribes to it. During that process, he gets granted a unique key that is used at runtime to identify the application using the APIs.
Once APIs are being consumed, they need to be monitored. Hence SAP API Management provides the following features:
– technical analysis: thanks to predefined dashboards, the API owner can see the latency, response time, backend errors, etc..
– business analysis: predefined dashboards also enable the business to see what APIs are being used the most, by what applications. This allows to steer the investments in that area, for instance provide more funding for a very successful app, or cut on costs for unused APIs.
– custom analysis: API Management users can introspect the content of the API calls and use that data to create custom dashboards. For instance, it is possible to have a graph displaying the most requested products from a product catalog available per API.
In short: SAP API Management helps Financial Services and Insurances to become digital players in an easy and secured way. But it is also about agility: the API Management layer also allows to “fail fast”, ie. create products in a quick and cheap way. But the most important to understand, is that API Management is an enabler: technically, everything is feasible. It’s really up to the business to work hand in-hand with IT, to create fresh, innovative and exciting new products.
The Financial Services and Insurance world is changing. It is not an easy journey, but using the right strategy and the right tools will allow to embrace exciting new opportunities!