So, what exactly is an API?
To give this its full name it’s an application programming interface (API). In simple terms this is a software intermediary which allows two applications or systems to communicate with each other. APIs have been in existence in human form for generations and in a technical form for 20 to 30 years, so in reality they are nothing new.
How does this work on a practical basis?
I recently heard a great example, which I think explains it pretty well.
You are sitting in a restaurant looking at a menu deciding what to choose to eat. Think of the kitchen as a system which will prepare and deliver your order – but how do you receive this?
You could shout from your table, or go into the kitchen and make your own dinner but this will probably get you thrown out.
What’s more standard practice is that a waiter – the API – will come and take your order, then communicate this with the kitchen to put together your order. When it is ready the API will be informed, and the food will be delivered to your table. All without you having to move a muscle, hopefully without having to repeat your order or send it back because it was incorrect.
There are also now restaurants where you can order directly from your seat via an app or ipad which directly replaces any human API. Or you can do this from the comfort of your sofa.
APIs in banking
They are also necessary for the functionality of Banking-as-a-Service (BaaS) – a key component of open banking.
BaaS is an end-to-end process that connects fintech’s and other third parties to banks’ systems directly through the use of APIs. It helps to build up banks’ offerings on top of financial providers’ regulated infrastructure.
Barclays was the first high street bank to do unsecured lending through APIs on Moneysupermarket and the first bank – ahead even of the challenger banks – to launch an aggregation app in our main banking application using APIs.
To change the way a 330-year-old bank operates is a monumental task but in the modern age it is a necessity.
However, when it comes to the wonderful and highly complex world of mortgages, APIs remain a challenge to integrate. All mainstream lenders are investing heavily in technology to streamline the mortgage journey and a large part of this comes in the form of APIs.
This involve lots of testing, redevelopment and more testing to ensure this makes the lives of the end users easier and that only relevant information is passed on and securely stored along this chain.
Successful collaboration equals successful integration
In short, lenders are integrating APIs into their offerings to help intermediaries reduce needless admin tasks, save them valuable time and allow them to spend a greater proportion of this saved time doing what they do best – giving advice and generating business. But patience is needed.
Technology which is rushed, badly developed and poorly executed can create more obstacles than answers in what remains a complicated journey filled with dynamic questions which need to be asked.
Progress is being made, but before pushing the big red live button we have to make sure these are work for not only our business but also for all links in the mortgage chain.
This is why it’s so important that firms work together to develop and integrate API solutions. Barclays has first-hand experience of collaborating with respected mortgage platforms, such as Smartr365 and Twenty7Tec, to enable brokers to halve the time taken to submit an application through the introduction of our Pre-population API.
Pre-population is just one piece of our ambitious API programme to deliver convenience and efficiencies for intermediaries, which we’re delivering through collaboration across our mortgage industry partners.