APIs – The Unsung Heroes of Speed, Explainability and Efficiency

When financial institutions are threatened by increasing regulatory pressure, escalating fines for non-compliance, and the perils of reputational damage, they need to take action to strengthen their compliance and financial crime screening programmes.

The challenge is to balance fast and frictionless onboarding and customer review for counterparty know your customer (KYC) whilst ensuring due diligence obligations are met.

When all hope might seem lost, Application Programming Interfaces (APIs) come to the rescue. APIs help to ensure financial institutions have a better idea of who an organisation is, if they can do business with that organisation, and if they should do business with them.

APIs Interstellar Communication
In layman’s terms, APIs are the pipelines that allow different applications to ‘talk’ to each other. They offer a seamless way to access data from an application, to send data to that application, to request a service from another provider, or for a host of similar data-sharing interactions.

Without a common protocol to automate data exchange, moving data or sharing information between disparate systems is a manually intensive, time-consuming endeavour that significantly slows down KYC review. APIs simplify the process by providing the missing link to seamlessly integrate data or intelligence directly into a bank or third-party system.

API’s accelerate connectivity, drive automation and boost efficiency whilst supplementing human decision-making – helping organizations strike the optimal balance of human intervention and automation to achieve business goals.

Benefits to the KYC World
With APIs, a user can easily perform a function or access data without needing to know the mechanics behind the process. While the technical “identities” may be hidden, the strengths of APIs from an operational perspective are immediately apparent:

  • Increase accuracy – By offering a standardised approach to collating intelligence that can be built into existing platforms, APIs eliminate the inconsistencies that may arise when relying on human interpretation.Data is captured automatically — the same way, every time — thereby eliminating manual errors and improving accuracy. Using APIs for KYC data collection has been shown to significantly reduce errors.
  • Improve efficiency – APIs speed back-end connections and functionality, automating the data collection process for faster onboarding and review. As data is collected seamlessly with minimal manual input, bank staff have more time to focus on customer service, building relationships with counterparties, KYC risk assessment, and other higher-value tasks. By delivering significant improvements to workflow efficiency, APIs raise the overall effectiveness of bank processes.
  • Enhance explainability – The standardisation inherent with APIs establishes a strong foundation for security and governance. APIs can easily be monitored and managed for performance and scale. Additionally, they provide a level of transparency that enables regulators, auditors and internal staff to better understand how and why data was collected.
  • Expand flexibility – APIs can be developed for existing systems, bringing greater flexibility and improved options to present outputs as useful and reusable artefacts.

The Desirable Endgame
Event-driven KYC is driving the quest for instant access to information, which is further complicated by banks’ expanding business networks. Traditional look-up tools and data files are proving inadequate to deliver the speed and efficiency to meet an institution’s needs or to deliver the documentation, transparency and intelligence regulators require.

APIs enable organizations to improve customer experience while providing the detailed information to meet regulatory obligations. Most of all, APIs offer business agility to keep pace with an ever-changing regulatory landscape and continued thirst for speed, explainability and efficiency.

That’s a positive endgame.