Most mid-sized and large banks are running the core banking software that is more than 30 years old. In the intervening decades, we witnessed the internet transform the world, commerce move to the mobile device and computing move to the cloud. Pioneering companies such as Google, Facebook, Apple, and Twitter demonstrated amazing technological solutions, transforming existing businesses and creating new industries. Banks’ main frame systems never anticipated such seismic changes. This presents a very real challenge to the banks that must operate APIs (application programming interfaces) and data driven decisioning.

API FinTechs can transform the functional and cross-functional decision support systems. A decision support system can be defined as an automated decisioning process, backed by certain data intelligence. Decisions, such as, auto-accept or auto-decline of loan applications and cross-functional capital management are some of the examples. As more and more banks opt-in for cloud-enabled core banking systems, APIs will act as a catalyst for risk, finance and treasury functions automation.

In order to survive in the age of open banking and connected experience, each and every financial institution (FI) needs to ask a fundamental question:

• Are we a technology company that delivers financial services?
• Or, are we a financial services company that delivers via technology?

Responding to the above question can then lead to the development 5 - 8 years digitization roadmap, answering questions, such as:

• How can we get plugged into a digital ecosystem?
• How can we develop design thinking?
• What are the projected benefits?
• What business and organizational models are needed to support the digital transformation of domains?

Experts predict that many FIs can get stuck in the middle of the digital transformation. Unlike technology companies, traditional FIs don’t have the experience, people and technology to transform to either end of the spectrum. Therefore, FIs need to urgently blueprint their digitization ambitions, figure-out achievable milestones and roll-out an action plan. Boards and CEOs need to examine the progress and swiftly address roadblocks.