Co-authored by: Keith Colaco
Recent fintech innovations, including app development, reveal a new precedent for the financial services and banking industry-- delivering faster, better, and more real-time and secure banking experiences.
When it comes to bank-to-bank (B2B) transactions, however, such a precedent can be difficult to meet even via recent fintech innovations in the current digital landscape. Financial institutions often rely on vastly different standards, processes, governance models, and systems, leading to long processing times and lack of system visibility.
Digital transformation is vital for resolving these B2B banking challenges. As an industry-leading API management platform, MuleSoft enables banks to digitally transform, giving them the functional capacity to deliver real-time transactions and expand revenue streams.
In this article, we’ll examine how both MuleSoft and HCL can help banks prioritize API development. This can help banks meet the shifting demands of the B2B banking and financial services landscape and offer enhanced digital experiences to their customers.
The banking industry’s demand for digital transformation
Settlement of intra-bank payments took days or even weeks, depending on how quickly these subsidiaries or retail businesses were able to send payment transaction details to the main bank. This was achieved using mechanisms like file transfer, large messages on TCP-based protocols, or maybe even via email attachments. Banks have implemented digitized check clearing and direct debit payments which have reduced these inter-bank transactions from weeks to a couple of days or hours.
In today’s digital age, the B2B banking space is demanding more secure and real-time transactions. The digitization in retail banking (B2C) has had a ripple effect, catalyzing an innovative open inter-banking model that prioritizes instantaneous and personalized banking interactions with customers. However, the notion of “real time” in B2B banking is more complicated than that in retail banking, and comes with its own distinct set of challenges. (Refer HCL's PoV on payment modernization in Canada and Australia )
For one thing, at both the international and domestic levels, foreign exchange and cross-border bank-to-bank transactions require time. Payments and settlements can take days— and dollars— to process, and many banks have limited visibility within processing systems. Hence, it becomes difficult to assess transaction lifecycle details and monitor and analyze data.
Different banks also adhere to different processing standards and pricing models, and many rely on legacy infrastructure or technologies that further limit flexibility and real-time data monitoring and management.
This is why financial startups and/or fintech organizations that offer rapid settlement and payment processing times are at a clear advantage, and not only from a revenue perspective. B2B banks face a significant dilemma— how can they maintain revenue streams, stay competitive in the B2B payments market, and enable more real-time bank-to-bank transactions?
The answer to this question hinges on technology and banks’ digital transformation. To move closer to the functionality of real-time processing, banks require the right infrastructure. They need to implement an API management platform that can expose the existing functionality and enable more instantaneous, visible, and secure B2B transactions.
APIs and the power of real-time transactions
Large banks and central banks of countries are now required to provide for platforms that act as payment clearing houses, allowing for payments to be settled in real time. What most banks may not realize is that many have this functionality in place. What they may lack is the capacity to expose this functionality, a prerequisite for real-time transactions.
APIs do exactly this, making data accessible and readily consumable in the moment, across banks and payment platforms, as opposed to batches processed at the end of a business day. When data is accessible in this way, banks enjoy end-to-end transaction visibility, instantaneous data delivery, and secure data processing. This gives the banks the ability to configure, isolate, and control API access (SLA tiers) and registration, on top of in-house security policies around authentication and authorization.
To expose this critical functionality, most banks will need to turn to a technology solution flexible enough to integrate with their existing core banking systems. They don’t need to surrender the infrastructure they’ve already invested in— rather, it is a matter of using a platform like Anypoint, for example , to modernize this infrastructure and add API management functionality to what is already in place. This is even possible for banks relying on monolith systems or enterprise service buses to process transactions.
For both central and global banks in the B2B space looking to digitally transform in this way, it’s important to first conduct several assessments. We recommend identifying the existing transaction volume, for example, the current technology stack in place, and its capabilities and limitations. From there, banks can identify how they would like to leverage existing technologies and which platform might best fit into their unique digital landscape.
MuleSoft and HCL’s solution to transformation
The MuleSoft platform is API-led, offering a technology solution that can help B2B banks deliver the real-time transactions that the industry demands. MuleSoft has much to offer banks starting their digital transformation journeys, but it is especially valuable given its capacity to expose functionality, reduce the overall amount of coding, and deliver both complex and simple integration solutions.
How exactly does it do this? MuleSoft, specifically the MuleSoft Anypoint platform with its components, enables massive hybrid API management, which makes different technologies within an enterprise visible and manageable within a single platform:
- Design Center & Exchange help banks with API design, publication, mocking/simulation, and collaboration with other banks and subsidiaries during the API Definition phase.
- API Manager enables banks to manage API registration, granular access, definition of SLA tiers, policy enforcement, and usage analytics as it provides these APIs as a service to other banks.
- With Anypoint Community Manager, the bank will be able to host an ecosystem enabling developers of participating banks to collaborate, simulate and consume the Payment API
- Anypoint Monitoring enables the banks to analyze all the logs and metrics collected by the platform, to uncover deeper insights to support your business outcomes and get a complete view of your APIs and integrations with the aim of meeting performance and uptime requirements.
In providing a single management platform that operates on a homogeneous runtime, the MuleSoft Anypoint platform distinguishes itself in the field of integration platforms.
It’s also highly adaptable to the needs of existing infrastructure, providing simple API management and proxy creation or complex integration with multiple core systems. MuleSoft’s high connectivity— with the capability to connect to nearly 300 connectors— allows banks to connect their front-end and back-end systems seamlessly, further supporting real-time data delivery. This is particularly important for institutions in the banking industry that use different processes, protocols, technologies, and formats when handling data.
MuleSoft and HCL can help banks in the B2B space resolve today’s challenges in the banking industry, providing the technical capacity to the financial institutions that need to process payments and settlements more securely and efficiently. Above all, such digital transformation is critical for banks looking for opportunities to expand their revenue, for real-time banking is the way of the future.
At HCL, we bring our expertise in integration technology and financial services to enable banks at every level. As a MuleSoft partner, HCL has developed accelerators such as ADvantage Code for MuleSoft and MuleSoft Utilities Libraries that help customers by simplifying API development and streamlining operations of the Anypoint Platform.
You can learn more about the Anypoint platform and its capacity to support real-time data management in the MuleSoft CONNECT Session, The future of massive hybrid API management.