Fintechs and Financial Institutions Can Step Into the Future Through a Digital Gateway

Financial technology can be a multiplier for financial technology. What does that mean? Fintech companies can work with other fintech companies to more quickly advance their solutions.

Rather than creating different versions of products and services for every banking core, an open API digital gateway offered by a partner fintech can make it possible for developers to build once. Traditionally, “check balance” would need to be “said” differently for each core, but a digital gateway can translate the command so that it’s “heard” in a way that each core understands. By collaborating, fintech innovators can eliminate the need for multiple builds and more quickly scale to serve a greater number of banks and credit unions running on various cores.

A single, homogenized interface that translates communication between modern technology solutions and banking cores can launch legacy systems into the future. Thanks to this abstraction layer, more opportunity to develop and deploy microservices is created. For example, fintechs can fill in core capability gaps, such as authentication management, or solve for issues like API response time, by developing cloud-based microservices that integrate to the core via the gateway. When fintech innovators are able to build one version of a solution, and it can be utilized by all financial institutions – regardless of the chosen core -- microservices proliferate, giving banks and credit unions an array of options.

Tying into an open API digital gateway also gives fintech developers access to the data behind the walls of a financial institution’s core banking system. Data is an essential ingredient for tailored solutions that are personalized for bank customers and credit union members, and it also deepens solution functionality. Interactions with an AI chatbot, for example, can become more meaningful. Rather than being limited to information exchange that doesn’t require account information like branch hours, user authentication can expand the self-service experience to include advanced inquiries and actions that require the user’s private financial data.

A fintech that provides a digital gateway to other fintechs is similar to a relationship structure often seen in the construction industry. Think of a building supply store that sells products to both professional contractors and homeowner customers. The digital gateway provider is the “store.” Fintechs that use the digital gateway are the “contractors.” And financial institutions are the “homeowners.” The store and the contractor both sell to the homeowner, but they typically sell different things. Working together enables the gateway provider and the gateway user – both fintechs – to expand.

Even banks that are large enough to have their own developers can benefit from a digital gateway, which can provide access to the financial institution’s core and bring microservices built by third parties within reach. The gateway conserves resources by making it unnecessary for the internal developers to maintain changes to the institution’s own API to accommodate integrations and provides easy access to data in its core. The microservices and the gateway access points are cloud-based, but the actual gateway is physically located in a remote data center, which saves financial institutions the cost of servers and other equipment.

Why else are next-generation web developers moving past monolithic architecture and embracing APIs and microservices? When all the little pieces of a system have their own functions and are maintained separately, complexity is reduced and upkeep is simplified.

Traditional implementation timelines amidst today’s rapidly-changing world result in missed opportunities. The ability to respond in an instant thanks to a digital gateway is a competitive advantage that sorts the leaderboard. According to McKinsey research, “the three-year revenue growth (of over 12 percent) for the fleetest was nearly twice that of companies playing it safe with average reactions to digital competition.” Modern implementation models win market share.

It’s time for fintechs and financial institutions to turn to an open API digital gateway for the scalability and flexibility offered. Not only can new services be “stood up” on a dime, but they can also be monitored, measured and reported in an efficient way.

Ushering in the future today is the way for fintechs and financial institutions to have a place in the financial landscape tomorrow.