Just how important is data integration in financial systems? Here’s your 5am wake-up

Among professionals in corporate Financial Divisions, there’s often a certain “bunker mentality” that’s nothing to do with the current imposition of self-isolation and social distancing.

A partially protectionist attitude might stem from a natural conservatism (small ‘c’) among financial careerists, or it could be attributed to an environment that constantly stresses risk-awareness, security, resilience, assurance, and safe governance of assets and personal data.

Furthermore, websites such as this one certainly play their part, featuring prominently many cybersecurity news stories and pieces about cybersec measures, breaches, threats, attack vectors, and the like. Be all that as it may be, no-one would blame a middle-ranking financial professional describing themselves as risk-averse.

What’s throwing an unfortunate curveball in this age of digitization is that organizations of every type and in every vertical are under increasing pressure to interchange information freely and openly, often as a result of user or consumer demand.

A common smartphone app, for example, might be a place where users make important purchasing decisions, like which insurance to buy. Those decisions might be at a consumer level, say, choosing from a range of travel insurance options. But increasingly (to extend our example), the app might be a place where multi-million-dollar E & O policies are compared. At the heart of each new app and the connected customer experiences it powers, is API integration.

It’s the APIs that open the virtual floodgates to the possibilities that integration offers. Opportunities for any institution’s strategists simply won’t present themselves without both the API facilities for integration, and an approach, overall, that values openness in parallel with security. Integration with other companies’ systems, be they new-generation brokers (like the insurance app developers’ example, above) or partners in new markets, now plays a critical role in whether or not a business succeeds.

An Akamai review of internet traffic in 2018 (PDF) noted that 83 percent of web traffic was to or from APIs, as opposed to, for example, transmitting email or serving webpages. Furthermore, of that 83 percent, the majority was for custom applications, “which [are] the result of digital transformations and cloud-based application deployment.” Nearly two years on, what’s increasingly apparent is that not only are APIs absolutely integral to digital commerce but, for the end-user, the ease with which they can enjoy a connected experience is how many decisions are made. It’s the quality of the integration between systems, operating seamlessly below the radar of most users’ awareness, that creates (or prevents) the desired experience.

Therefore, a customer experience (to coin another well-worn phrase) that’s slow, or unresponsive, or perhaps in the case of a more conservative institution’s services, not available at all, is enough of an impetus for a competitor’s product to be chosen. With competing products and services literally a click away, the integration between companies and organizations, and data interchange in a timely yet safe manner is at the core of commerce, and much else, in 2020. That’s indubitably the case now and will be of increasing importance in the future.

When API integration allows data to flow smoothly between applications, the results are truly catalytic. In the UK, for instance, the Open Banking initiative (such as the Second Payment Services Directive [PSD2], which came into force in January 2018) means that companies can access highly-controlled and regulated information about companies’ and individuals’ finances to promote better services and let companies and institutions compete more freely.

As large finserv providers enter new markets and compete with newer, potentially disruptive fintechs to better serve the needs of CFOs, it’s that type of API-first facility that will dominate the market. And so, ensuring integration-ready digital products and platforms now plays a leading role in many organizations’ digital plans.

There are, naturally enough, many thousands of IT-focused companies that will aid companies that have to present themselves and their services both to the internet and to internal services, too. But Cloud Elements is one vendor whose provenance is not pure-play IT. From its own first-hand experience in the financial sector, it has set out to modernize how banks connect new digital platforms to their legacy service infrastructure, and how fintechs of any type can deploy one-to-many integrations. Better integrations done the way that corporate finance likes to work means Cloud Elements’ customers see value faster, and can develop an agile posture, open to new possibilities.

The company’s expertise comes right on time. Disruptive products are putting significant pressure on the longer-established, slower-to-move businesses. New specialized applications are automating and providing new insights from data. These apps have to connect with each other, and with other enterprise systems, like ERP, for example. That’s increasing the importance of the FP & A (financial process and analysis) professional.

Sometimes, however, issues like security in physical and digital senses predominate. There’s a certain reticence to take what many consider, still, to be risks with technology when it comes to decision-making when approaching new markets, perhaps developing new services & products, or even launching apps for consumers and prosumers.

The current crisis has thrown into relief some highly malleable elements in CFOs’ considerations: huge disruptions in supply chains, current accounts and liquidity across accounts, supplier terms and commitments, customer credit information, and much else besides.

Those shorter-term prevailing considerations are convoluting an already complex picture that’s dominated by disruptors’ influence on (or threat to) the financial sector.

The secrets to navigating in the short and long terms are information, system integration, accurate analysis, and data connectivity. These underpin the quality of customer experience, and also open the door to a more integrated future.

Primary keyholders are deploying Cloud Elements, and its ethos of better integration and efficient APIs.

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