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How Flexible APIs and SaaS Are Revolutionizing Banking

June 29, 2023

The banking industry’s digital transformation is increasing the onus on financial institutions to be able to deliver faster, smarter and more personalized services, such as data-driven customer engagements and artificial intelligence-based chatbot support

But quickly deploying and effectively scaling these capabilities requires technology that is nimble and flexible. Those two adjectives rarely apply to legacy core banking tech stacks, which tend to comprise multiple software systems, each with limited functionality, long installation processes, high overhead costs and heavy maintenance and administration requirements.

For banks operating off of such outmoded tech frameworks, continually patching on additional software to fulfill customers’ ever-expanding digital demands is simply not a feasible competitive strategy over the long term. 

The good news for FIs seeking to maintain market share amid the digital paradigm shift? Modernized banking technology offerings, which leverage application programming interfaces (APIs) and Software as a Service (SaaS) delivery models, enable banks to roll out and administer new services much more quickly and efficiently–and at lower cost. 

In a recent podcast with the Financial Brand’s Jim Marous, Galileo Chief Product Officer David Feuer outlined three key ways that flexible APIs and SaaS partnerships can help banks overcome legacy technology and access the speed and scale of innovation necessary to remain competitive in the industry’s digital-first future.

1. Break free of tech limitations.

“When I talk to chief technology officers or chief information officers at banks, the problem they're trying to solve inevitably comes down to, ‘My tech stack is holding me back. I can't develop the products I need or the experiences I need because my tech stack cannot evolve quickly enough to meet those needs,’” said Feuer. 

APIs offer a way around that dilemma, enabling banks to offer their customers modernized products and experiences by simply plugging into the functionalities offered by third-party banking technology providers, such as Galileo, under an SaaS model.  

Compared to continually bolting on additional software systems to their legacy tech stacks, this approach enables FIs to roll out new services quickly and efficiently–and also greatly reduces the time, effort and cost needed to run and scale those services in-house, Feuer noted. 

“To have to install, maintain and do the operations, maintenance and administration of software–that's a heavy lift,” said Feuer. ‘It's hard to do, and frankly a lot of banks simply don't want yet another application or set of applications with yet another group of people that have to run it. And so being able to offer Software as a Service is a significant benefit to the banks, because they simply don't have to worry about a lot of the overhead associated with installing and maintaining software.”

2. Speed and scale new services.

As the pressure steadily grows on banks to augment their offerings with new capabilities and digital optimization, FIs increasingly are looking to the API/SaaS model to furnish these functionalities–whether on a permanent basis or as a trial run to establish proof of concept for a particular service. 

“We’re hearing banks say ‘What I really need are specific capabilities. I need a demand deposit account; I need a specific type of term loan, or small and midsize business (SMB) lending API… so that I can very quickly roll out that product, get some market experience, test the market and drive the value proposition, with no software to install,’ Feuer said. 

And when it’s time to scale up those services, an API/SaaS framework enables banks to quickly and easily do so, because the third-party banking technology provider already has done the work to build out their own infrastructure, so the bank simply has to access it. 

“A bank can run as fast as their market is demanding and as fast as their risk appetite is, [so] they can simply come to us and we can unlock that functionality for them in the cloud very quickly,” said Feuer. “These things can be implemented in a matter of months instead of a matter of years.” 

3. Align with banking’s ecosystem future. 

Along with streamlining the delivery and scaling of services, APIs and SaaS also are critical tools banks must use to optimize their offerings for what Feuer described as the ecosystem-centric future of financial services–in which banks deliver services within the platforms of other financial and non-financial providers and brands. 

Learn how any brand can benefit from offering embedded financial services.

Examples of this ecosystem model range from FIs delivering banking services via digital devices such as Apple Watch and Amazon Alexa, to participating in emerging next-generation financial frameworks like the upcoming Fed Now realtime money transfer system, to integrating with third-party systems for services like liquidity analysis and lending, Feuer noted. 

How banks should prepare for ramp up in real-time payments.

All of these applications and use-cases require banks to have the capacity to deliver services quickly and flexibly within a variety of digital contexts–necessitating those deployments be backed by the powerful yet nimble technologies, such as those offered by SaaS providers leveraging cutting-edge APIs.

Speaking of Galileo’s approach to helping bank clients capture this emerging market opportunity, Feuer said the company prioritizes a deep level of collaboration and coordination throughout the entire process of delivering and scaling new contextual digital deployments.

“We can help banks accelerate their participation in and development of ecosystems by quite literally treating ourselves and the banks as ecosystem partners that can go to market together,” the Galileo CPO noted. 

To learn more about how Galileo’s APIs can help your bank deliver digital services and leverage the emerging ecosystem opportunity, get in touch with us.

This is the third installment in a special multi-part blog series. Click here to read Part 1 and click here to read Part 2. And to catch the full interview with Jim Marous from the Financial Brand, click here.

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