Why Credit Unions and Banks Need APIs More Than Ever

By Mike Duncan, CEO and Founder, Bankjoy

Thanks to John GracyalnyFarhan JadavjiWalt Cox, and Shai Stern for reading drafts of this. Photo by Chris Ried.

When I landed a job at a local, progressive credit union, I didn’t know what I was in for. “.NET developer” is what they called me. Innovation was the outcome, and as someone who kept a pulse on the latest technology and loved programming, I was looking forward to bringing my tools to the credit union world.

The many challenges awaiting me included COBOL-like languages, proprietary interfaces built decades ago, and single-sign-on interfaces that led to Frankenstein-like products where each product feature looked and felt like a completely different product stitched together with iFrames and new browser tabs.

Further, innovation in the banking industry was and still is stifled by a tangled mess of big monolithic systems that have struggled to evolve easily with modern times. The greatest victims are the customers and members of America’s financial institutions who expect more.

We live in a time where modern development tools are being built and evolving so rapidly that it takes days, not months, to build useful products. New FinTech companies like Monotto help people develop safety nets and save for life goals. AI companies like Clinc are building the next generation of personal financial assistants that can be accessed at any time, day or night, from Alexa or your phone. And, Bankjoy’s modern API-based technology allows it to deliver feature-rich digital banking cost effectively to financial institutions big and small.

Leading up to the new year, there were many social media posts about roadmap checklists for financial institutions. The checklists included broad products and features like mobile banking, remote check deposit, and online loan applications. In 2018, I think it’s fair to say, if you don’t have these basic products and features today, you’re already behind. Even if you do have every product on those checklists checked — do they work together seamlessly?

The real question is, how do you get ahead? The first step is to build a foundation for real innovation using open and collaborative technologies.

Start With The Core

Bankjoy has been part of many successful core conversions in the past several months as credit unions converted to new, modern core systems including Corelation and CUProdigy. But, core conversions are painful — they take a lot of time and resources, so why would any financial institution do it?

“It makes no sense to spend several millions of dollars and take two years out of the life of your financial institution only to replace 40 year old technology with 30 year old technology” —John Gracyalny, VP of IT at SafeAmerica.

One of the most important reasons to convert to a new core system today is choice. Adopting a new, modern core system provides two competitive advantages:

  • Modern core systems are equipped with modern APIs that developers are familiar with. Developers can use these APIs to build applications that leverage core data and features more quickly and easily.
  • Modern core systems providers have a tendency of being more open and collaborative. Unlike the old banking technology stack that is closed and prohibitive to new technology providers, new core systems companies welcome it and have a competitive reason to remain open.

Next, Adopt Modern 3rd Party Systems

Creating modern, homogeneous systems that function seamlessly across channels requires 3rd parties that are open, collaborative, and agile. Choose your mobile banking, online banking, bill pay, and other systems wisely. Hallmarks of vendors that will serve your innovation goals:

  • They provide easy-to-use API documentation
  • They provide SDKs
  • They provide support for developers and encourage use of their APIs and platforms
  • From the start, they develop their own software using modern APIs and service-oriented architecture
  • They develop partnerships with you to build the best experience for your customers and members