With disconnected processes and systems within their customers’ infrastructure exacerbating the issue, it’s not surprising that many fintech solutions are difficult to fully integrate. Indeed, almost half (40%) of fintechs globally are struggling to connect to their customers’ applications or systems, according to research from InterSystems.
This challenge is likely to make it difficult for fintechs to integrate any new applications or solutions within a financial services organisation’s technology stack – impeding their ability to collaborate with these types of institutions. With 93% of all fintechs surveyed keen to collaborate with incumbent banks in some way, connectivity problems could seriously inhibit their ability to capitalise on these potentially lucrative relationships.
To avoid missing out on opportunities like these, fintechs must find a way to connect more easily to any financial services organisation’s existing legacy applications. 47% of global fintechs state that enabling better integration with customers and third parties is one of the biggest drivers behind implementing new technologies, so there is a clear appetite to address this challenge.
One of the most effective solutions for fintechs is to develop a bidirectional data gateway between their own applications – of which 98% are at least partly cloud-based, 23% are hybrid cloud and on-premises, and the remainder are based in public or private clouds – and their customers’ environments. This can be achieved with smart data fabrics. With cloud offerings making it easier to provide remote access and service updates, in addition to facilitating deployment on-premises, developing a bidirectional gateway will ensure that financial services institutions do not miss out on innovative fintech applications.
A new architectural approach
Traditionally, integration of fintech services and applications has been accomplished through manual and cumbersome means: the slow process of coding point-to-point integrations and moving and copying data is difficult to maintain and notoriously prone to errors. Moreover, this outdated practice makes feeding applications the live, real-time data they require extremely difficult.
By implementing a smart data fabric, a new architectural approach, fintechs can create a bidirectional, real-time data gateway between their cloud-based applications and their customers’ existing on-premises and cloud-based applications and data stores. The smart data fabric provides a complementary and non-disruptive layer that connects and accesses information from legacy systems and applications on-demand.
Smart data fabrics integrate real-time event and transactional data, along with historical and other data from the wide variety of back-end systems in use by financial services organisations. They can then transform it into a common, harmonised format to feed cloud fintech applications on demand, providing bidirectional, real-time, consistent, and secure data sharing between fintech applications and financial services production applications. Bidirectional connectivity also ensures that any changes made through the fintech applications can be securely reflected in those production applications.
Embracing this new architectural approach will allow financial services organisations easy leverage of new fintech services and applications, facilitating seamless integration with their existing production applications and data sources. For the 40% of fintechs currently finding it difficult to connect to their enterprise customers’ environments, this will be very gratefully received – and will open the door to mutually beneficial partnerships with banks.
Driving innovation forward
Easier integration between fintech cloud-native applications and financial services organisations’ existing infrastructures will provide banks with a consistent, accurate, real-time view of their enterprise data assets, as well as increased speed and agility. With the financial services sector in need of an innovation injection to meet changing customer and regulatory expectations, this smart data fabric-powered approach to developing a bidirectional data gateway will also help to spark creativity and fuel innovative ideas.
These capabilities will enable financial services institutions to swiftly react to new opportunities and changes in their environment. It also gives them the insight needed to make better business decisions and improve customer experience, as they can provide more digital and hyper-personalised offerings.
Fintechs across the world are recognising the potential benefits of improved collaboration with banks. 56% believe that banks will get value from fintechs through improved customer experience and engagement, while 50% say that better partnerships will result in more opportunities for banks to focus on their core areas of expertise. A similar number (54%) believe that banks stand to gain from increased agility and speed to market. With data fabrics, fintechs and banks can take steps towards putting these objectives into motion.
A win-win for fintechs
By adopting a smart data fabric approach to implementing a real-time, bidirectional data gateway, fintechs globally will effectively kill two birds with one stone – helping to increase both collaboration and innovation.
Embracing this new type of data architecture will allow fintechs to better connect their cloud-based applications to their customers’ environments, allowing solutions to be more swiftly and easily integrated within those environments. In turn, this will boost the potential for collaboration with financial services institutions.
Furthermore, this technology will enable fintechs to better support financial services organisations through their own data struggles, helping data to instead become a critical differentiator that empowers financial services to swiftly innovate. By being able to more easily adopt fintech applications, financial services organisations can unlock faster development cycles, experience fewer bugs, and even reduce their total cost of ownership. Enhanced innovation opportunities will steer institutions towards their business goals, thereby delivering benefits back to their customers and creating an all-important competitive edge.
About the author: Redmond O’Leary is Sales Manager, Ireland at InterSystems.