I’m constantly inspired by our team members’ innovative thinking and insights. Reflecting on 2023, I want to highlight five thought leadership blogs from our employees (and one from me) that every financial institution leader should read. Each blog presents crucial advancements and ideas reshaping how our financial institution (FI) customers operate and innovate. As this year draws to a close, and you find yourself reflecting on the last 12 months and the year to come, my hope is that you find these pieces as inspiring as I do.
This thought-provoking blog set the tone early in the year for how we think and operate differently regarding banking core integration. In this piece, Charles emphasized the need for community FIs to evolve beyond mere integration between their banking cores and other systems. He introduced the concept of Customer-Integration-to-the-Core-as-a-Service (CICaaS).
This comprehensive solution, we now call Connectivity-as-a-Service (CaaS), distinguishes our methodology from other integration companies. CaaS represents the intersection of years of advisory services for FI customers and the technical capabilities of the PortX platform (our IPaaS for banks and credit unions). But CaaS didn’t materialize overnight. This blog is also an excellent source on PortX’s journey from a general integration company to the financial industry-focused partner we are today.
Importance to FIs:
Connectivity as a Service (CaaS) is crucial for FIs as it offers an advanced integration strategy beyond basic banking core connections. It combines streamlined processes, open banking access, and advisory services to enable easy scaling for FIs. This approach minimizes digital transformation challenges by combining the flexibility to choose from best-of-breed technologies with the simplicity of a best-of-suite strategy – allowing FIs to focus on core operations.
2023 was a turbulent year for FIs, and it started with a bang! Though the collapse of Silicon Valley Bank and First Republic Bank sent shock waves through our industry, it also provided a unique learning opportunity. My co-founder and CTO, Kent Brown, shared six vital lessons we learned about banking integration as a result of this monumental event:
- Prepare for worst-case scenarios.
- Exception management is vital during high-volume transactions.
- Real-time access to data via APIs is essential in tumultuous events.
- FIs need a financial services-focused integration partner.
- Make digital online account opening as seamless as possible.
- FIs with an API-centric integration strategy will be the winners.
Each lesson underscored the critical role of robust and adaptable technology in crisis management. Of course, Kent goes into far greater detail in his blog.
Importance to FIs:
These lessons are crucial for FIs to build resilience and maintain agility during unforeseen events. Emphasizing the need for scalable technology and efficient data management, the insights from this blog can guide FIs in fortifying their operations against future crises.
This year left little doubt about the role that Artificial Intelligence (AI) will play in our everyday lives for the foreseeable future. The rapid integration of AI in the banking sector offers numerous benefits, such as enhanced customer service through intelligent chatbots and automated processes for account opening and loan approvals. However, Adrian Hsieh’s blog highlights significant risks associated with AI in FIs, emphasizing the need for careful mitigation strategies. The key risks involve security, compliance, and reputational challenges.
Here, Adrian does an excellent job of educating us on the practice of Continuous Audit and Continuous Training (CA/CT) processes to mitigate these risks. Continuous Audit involves reactive and proactive checks on AI interactions, ensuring compliance with expected outcomes. Continuous Training helps maintain the accuracy and relevance of AI models by regularly updating their training data. A well-designed integration platform plays a critical role in these processes by managing the flow of data necessary for CA/CT, highlighting PortX’s capabilities in designing robust, flexible, and scalable integration platforms suited for the evolving needs of AI in banking.
Importance to FIs:
Understanding and managing AI’s risks is essential as it becomes increasingly integral to banking operations. This blog provides FIs with a roadmap for safely incorporating AI into their services, ensuring they leverage its benefits while upholding regulatory compliance and customer trust.
Bonus AI-related material:
- AI and ChatGPT Accelerate Banking Integration and Fintech Deployment
- ChatGPT Use Cases for Banking: An AI-First Approach to Financial Services
Kent Brown’s article on our Open, Reusable, Core API (ORCA) (we changed the name from Open Banking API to be more specific) addresses the complexities of integrating various banking systems and introduces a streamlined solution. Integrating with your core is often hampered by legacy systems, data security, regulatory compliance, and technology-specific nuances. To overcome these challenges, we created a universal data model that simplifies this integration process (which Kent elegantly presented in this blog).
The development of ORCA was a significant endeavor we took on to transform how FIs approach their business models and partnerships. It facilitates easier and faster integration with core vendors, reducing development time and operational costs. Additionally, ORCA offers the flexibility to onboard new fintech partners quickly, deploy multiple use cases, and even transition between different core systems while maintaining continuity.
Importance to FIs:
ORCA provides a standard API definition, covering most core vendors and encompassing common FI operations like digital banking and account management. This standardization eliminates the need for direct wiring of business logic to the core, enabling you to connect with fintechs and other applications efficiently.
5. Banking Core Middleware vs. Integration-Platform-as-a-Service (IPaaS): Why the Difference Matters
Please pardon a bit of self-promotion in including one of my blogs among these top reads, but the topic is of such importance that it merits further emphasis (plus, I had help from our team writing it). This blog was born from my daily interactions with bank and credit union leaders, where I often clarify a point of confusion: “Why is an Integration-Platform-as-a-Service (iPaaS) like PortX necessary if my core vendor already has an API or ‘middleware’ solution?”
Traditionally, FIs have relied on core providers for system integrations, often resulting in ‘blackboxing’ – a lack of transparency and flexibility in the integration process. This approach leads to additional costs, limited functionality, and an inability to adapt to changing technological demands. In contrast, an IPaaS like PortX offers a comprehensive suite of services that go beyond the basic functionality of core-provided APIs. This modern solution addresses the limitations of traditional middleware by enabling seamless integration between various applications and the core system.
Importance to FIs:
The transition to IPaaS is a strategic move for FIs to stay competitive. The industry is shifting toward banking-as-a-service, embedded finance, and integrating advanced systems such as shadow cores and data warehouses. This shift underscores the rising significance of platforms like Customer 360 that provide deep insights into customer interactions, enhancing the effectiveness of cross-selling and upselling strategies. Consequently, the focal point of banking technology is evolving, leading FIs to allocate more resources to these innovative applications rather than traditional core systems.
Our team is committed to pushing the boundaries of financial technology and highlighting the pivotal role of FIs in today’s fast-paced digital world. These five blogs, while standing out to me, represent just a snapshot of the wealth of insights and perspectives available on our site. I encourage you to explore our other blogs for a more comprehensive understanding of the diverse challenges and opportunities facing FIs. Is there a topic we missed? Or, want to learn more about one of these? Start a conversation with us today.