Horses for courses
What file-based integration really excels at is moving large amounts of structured data around and managing compatibility issues between systems — for example, abstracting away differences in outputs and formats between enterprise resource planning (ERP) and industry payments systems using translation and data enrichment logic.
And because legacy systems typically operate in batch and file processes, this can provide an easy pathway to automate some workflows and get some benefits early while you work on ‘API-enabling’ your organisation.
One interesting example ANZ came across in recent times was when a customer used our data-enrichment capability to address deficiencies in beneficiary account data held in their systems.
This was a multi-national company with several legacy financial systems. Their beneficiary data had aged over time, with gaps that were generating a lot of manual work (things like BSB details not being compliant with newer industry standards and the like).
ANZ implemented a file-based solution to automatically repair data deficiencies to ‘in-flight’ payments and then report back to the customer so they could correct their data over time.
It was a great outcome for the customer. They minimised processing delays for urgent or time critical payments. They reduced the need for manual intervention and therefore the workload for their operations teams. And they avoided what would have been an expensive data remediation project, along with reporting to correct their system data over time.
Great solutions don’t always require an API. File-based integration is still a pragmatic way of solving real business problems and perhaps a reason for why API adoption has been slow.
Real-time use cases
Where APIs really shine is when we talk about real-time use cases. While a file is typically an accumulation of information over time for processing later, you can think of APIs as a stream of information processed in the moment.
Take billing for example. Traditionally, information about bank fees and charges would be received by ANZ’s customers through invoices and PDF files.
As a result, finance departments would need to invest significant manual effort into collating this information to get even the most basic insight around total monthly fees across all their accounts.
And when you consider that many ANZ customers are regional and multi-banked, that problem is multiplied by each banking relationship they have.
But by using APIs to connect our systems internally, ANZ has been able to present information around fee payments and product usage to our customers on demand through our omni-channel service, allowing them to make better informed decisions around optimising their banking.
That solves an important issue for customers - but only for one of their banking partners. The real evolution would be for each banking partner to provide an API that could deliver their respective information directly into the customer’s treasury management system and display it in a way that works for them.
One of the key tenets of modern digital business models is the recognition customer needs can be better met through a combination of partners than through a single organisation’s capabilities alone.
In the past, the ability to easily exchange information between organisations was hindered by a core philosophy of network security which treated an organisation like a walled garden. Data could flow freely within those walls but moving beyond them was difficult.
APIs solve this issue by moving to a ‘zero trust’ or ‘continuous-authentication model’ which, in layman’s terms, means relying less on where the request is coming from and more on authenticating each individual request. This aspect removes a traditional barrier to partnering with other organisations.
The ability provided by APIs to aggregate data for better decision-making or curate best-of-breed capabilities to either deliver operational efficiency or better meet customer needs should be treated as a strategic priority for any business looking to excel in a digital world.
The agility this provides, along with the optionality to swap out an underperforming partner for another, will help businesses better respond to an ever-changing and uncertain environment.
Leigh Mahoney is Head of Wholesale Digital at ANZ Institutional
This article was originally published on ANZ’s Institutional Insights website