By Giuliano Altamura, Business Unit Manager Financial Services, Fincons Group

Pivotal role of digital integration hubs in transforming the banking sector

Today’s banking customers have radically changed the way they interact with service and good providers across sectors; they have come to expect a much more tailored and interactive customer experience that however is not always standard in every sector. Reports show that around 60% of banking customers use digital channels and that 80% of all customer touchpoints are digital[1], yet the financial services sector as a whole has been struggling to keep up with the pace set by digital-native industries like e-commerce.

While banks could once expect most activity, from querying balance to making transfers and payments, to take place at the branch or over telephone banking, nowadays bank customers expect to be able to access and query information over a growing range of touchpoints: Instant Messaging (IM), apps, the telephone, the web, emails, text messages and so on. They also expect customer experience across these channels to be consistently fast, interactive and organic, and, at the end, nice.

More touchpoints also mean more data to process, both in terms of query volumes and incoming data. The frequency with which consumers interrogate systems from apps, online portals, telephone banking or other channels is higher than ever before with older customers also becoming confident that digital transactions, bank transfers and payments are safe as well as cheaper or indeed free of charge.

These demands require new modern front-end systems that are attractive, engaging and fast but that also critically provide independence for legacy systems that remain in control of data and business operations. Pressure on line-of-business IT, and in particular on legacy back-end systems that are often business-critical, should not increase as these new front ends are developed or they risk underperforming on their core operations. In addition to this, front end systems need to be available 24/7, while legacy technology requires machine time for core activities and cannot risk losing capacity.

But the banking sector is not just facing the need to modernise its customer experience, it is also facing the significant competition of challenger and neo-banks as well as the mandatory need to comply with new regulation, specifically the Payment Services Directive 2 (PSD2) and Open Banking standards. PSD2, or ‘The Revised Payments Directive’ was designed to increase competition in the EU electronic payments market, provide consumers with more choice, and define rules and regulations for payment services that improve security and efficiency. The Directive also serves as a move towards Open Banking and obliges banks to share some of their customer data with other players. Fears are that this will lead to unpredictable peak request periods on banks’ legacy systems causing unnecessary delays and lack of efficiency, a view confirmed by a recent Polish survey where 91% of banks reported they felt the need to standardise APIs in connection with PSD2[2].

Making some customer data accessible to third parties should provide a clearer and more comprehensive view of customer spending habits but will also make protecting customer data much more difficult. Use of AI may come to the rescue on this front by helping to identify suspicious and unusual transactions or authentication patterns in real-time and flagging them up for prevention of fraud and money laundering.

In addition to these market pressures the banking sector needs to grapple with introducing blockchain, distributed ledger technology, Big Data, IoT, Cloud computing, AI, Biometric technology and Augmented/Virtual reality into its systems. Integrating all these new technologies is going to exacerbate the pressure on systems caused by data volume.

To lighten the burden on legacy systems and improve access to data and analytics Application Programming Interfaces (APIs) and microservices architecture are being developed. This should enable banks to leverage new technologies and additional external and internal data without overhauling their back-end systems entirely.  All these solutions, however, typically interface directly with back-end legacy systems where business critical information is stored. Not only is it important that historical data remains securely fenced off from any risk arising from providing third party access, but financial services businesses also need to protect their line-of-business systems  from unpredictable peaks in data access queries that could be caused by third party or partner activity, for example.

So how can banks protect their back-end legacy systems while also leveraging powerful API integration? A new, more efficient architecture centred around Digital Integration Hubs is rapidly standing out as a solution. In this new design, APIs read data extracted from a ‘data lake’ which is continually updated in near-real time by the legacy systems with an optimally flexible and efficient ingestion procedure, rather than by calling data up from legacy systems directly. The opportunity to feed in data from trusted third parties (TTPs), the IoT or Big Data therefore remains unfettered.

Digital Integration Hubs differ from Data Management Platforms because the latter were based on a batch approach to gather data from legacy systems. Typically, data in the Data Warehouse (DWH) was usually updated on a daily rather than in real-time basis requiring hundreds of extraction and ETL procedures to pull out legacy data and feed the data warehouse. As a result, traditional DWHs are useful for Analytics & Reporting but are inadequate for customer-facing Front Ends.

Digital Integration Hubs are designed to help reduce complexity of the API service layers and to decouple them from system of record data and line-of-business environments. They thus enable the consolidation of historical as well as new and real-time data into a single repository with 24/7 availability of near real-time data that APIs interact with instead of the back-end. In case of peaks in inquiries, load is thus managed by the data hub with no impact on back end operations.

The ideal solution should help realise all the above benefits and not just a portion. It should be speed and data agnostic as well as cloud-ready if not based and provide intuitive ‘Google-like’ search functions. Flexible end-to-end solutions are ideal to help insurers fall into step with the digitalisation of consumer and intermediary expectations without putting their systems at risk. Although slower off the mark than other more digital sectors like retail or travel, the banking sector is ready to embrace the benefits of customer experience improvement, compliance and operational efficiency. To do this, the sector need to ensure that its historical systems are protected both from cyber criminals as well as inefficiency. Data integration hubs stand out as the solution designed to provide a reliable connection between back-end system integration and new technologies that does not put systems at risk.

To find out more, please download the latest whitepaper from Fincons Group here:

[1] Mckinsey & Company, The balancing act: Omnichannel excellence in retail banking, January 2019,

[2] KPMG, PSD2 and Open Banking, March 2019


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