Application programming interfaces: The new (old) game in town

Godfried De Vidts
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Godfried De Vidts: Senior Advisor, ICMA ERCC, Belgium

Journal of Securities Operations & Custody, 2020, vol. 12, issue 3, 278-285

Abstract: This paper analyses the impact of regulatory pressures, combined with new, better, faster and cheaper technology, which are key drivers in the evolution of financial markets. Financial institutions increasingly recognise that continuing with old processes will not deliver the required efficiencies that continue to drive market growth. So, institutions need to accept change if they are going to reap the benefits of the last ten years of painful market reforms. As we look to the future, application programming interfaces (APIs) will continue to improve both efficiency and connectivity, with banks, clients and partners further adopting this technology to share data and integrate ecosystems securely and in real time. If the wholesale banking market wants to create modern, integrated, frictionless, and above all, better clientcentric experiences, then API adoption is key. There is also an opportunity to further improve banks’ engagement with other financial institutions. To date, this has often involved Society for Worldwide Interbank Financial Telecommunication (SWIFT), which prescribes how often (and what type of) data can be exchanged. As connectivity improves and transactions increasingly take place in real time, however, the limitations of this approach have become more apparent and something needs to change. Technology is a great enabler of change. APIs are not new, but it is their rate of development and increased adoption that is changing the game. Welcome to the new world of financial markets. Why did it take so long?

Keywords: API; technology innovation; market evolution; FinTech (search for similar items in EconPapers)
JEL-codes: E5 G2 K22 (search for similar items in EconPapers)
Date: 2020
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